If your car donation meets the "gross proceeds" hurdle, and the charity will be actually using the car, giving the car to someone who will use it, or making material improvements to the car, you'll need one of the following:

1) a letter from the charity certifying that they will actually use of the vehicle, a description of that use, and an assurance that the car will not be sold before that stated use is completed.

For example, if you donate a car to a local home elder care charity, the charity must explain in their letter documenting your car donation that they will be using the car twice a week to deliver hot lunches to elderly people who cannot get out on their own, and that they intend to use this car to deliver these lunches for as long as the car is mechanically functional.

2) a letter from the charity saying they will make "material improvements" to the car, with a description of exactly what those improvements will be, plus a promise that they will not sell the car until the improvements have been completed.

The IRS defines "material improvements" as major improvements to the car. An oil change doesn't count, but replaced a severely cracked windshield probably would pass muster. If there is a mechanical problem that seriously compromises the use of the car or makes it unsafe, fixing that issue would definitely qualify as a material improvement.

Do note that there's "wiggle room" with this IRS term, and that several crucial IRS terms (like "substantial use" mentioned later) are never really defined by the IRS. Its up to you or your tax preparer to make sure you're on the right side of these judgment calls.

3) a letter saying the charity will be giving the car to a needy person.




If you donate your car and your tax deduction is going to be for more than $500, you'll also need an official document from the charity (a signed, dated letter on the charity's letterhead qualifies) that includes the following information:

1) Your full name and your taxpayer ID number
2) The vehicle identification number (VIN) of the car you donated
3) The date you donated the car

4) A statement addressing at least one of the following:
- that you received no goods or services in exchange for your donation
- if you did receive something in exchange for your donation, a statement from the charity saying what those goods or services you got for the donation were, and what their fair market dollar value was.
- a statement from the charity confirming the only "goods" or "services" you got in exchange for the donation were "intangible religious benefits", which is IRS-speak for being a generous person, or getting good karma, or the feeling of having done a good deed, or making Jesus proud, or however you would describe those "intangible benefits".

Beware: if your letter from the charity does not meet these requirements, you can't deduct more than $500 for your car donation.



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