What is a 1098-C: Contributions of Motor Vehicles, Boats and Airplanes
When you donate a vehicle to charity, you may be able to deduct it as a charitable contribution if you itemize your deductions. Soon after donating a vehicle, boat or airplane, the charitable organization may send you a Form 1098-C that reports details about the donation that may impact your deduction. In some cases, the Internal Revenue Service may deny your deduction without Form 1098-C attached to your return, so keep it in a safe place.
Key Takeaways
- Form 1098-C is necessary for claiming a deduction on a donated vehicle valued at more than $500.
- The maximum deduction for a donated vehicle valued at more than $500 is the smaller of the amount the charity sells the car for or the fair market value on the day it was donated.
- Exceptions to the sale proceeds limitation exist when the charity keeps the vehicle, makes improvements to it before selling, or gives the vehicle to a needy individual.
- When the charity sells the vehicle for $500 or less, the most you can deduct is $500.
Why you need Form 1098-C
If you donate a vehicle to a charity and its fair market value is more than $500, generally, the maximum deduction you can take is the smaller of the amount that the charity sold the vehicle for or the car's value on the day you donate it. In order to receive a deduction for a donated vehicle that is valued at more than $500, you'll need Form 1098-C for completing your tax return. The amount that the charity sells the vehicle for is in box 4 of Form 1098-C.
Exceptions to the sale proceeds limitation
A vehicle donation deduction over $500 is based on its fair market value and isn't restricted by the sales amount if the charity does any of the following:
- Keeps the vehicle for its own use
- Makes "material" improvements to it before selling it
- Decides to give the vehicle to a needy individual at no charge or at a price that's less than it is actually worth
If box 5a or 5b is checked off on Form 1098-C, your donation is typically eligible for an exception, and you can typically deduct the car's value.
TurboTax Tip:
Form 1098-C reports additional information about the vehicle, including make and model, mileage, and any goods or services received from the charity that may affect the deduction.
Vehicle sold for $500 or less
When the charity sells your vehicle for $500 or less and none of the exceptions apply, box 4a of Form 1098-C should be checked, and the most you can deduct is $500. But if the vehicle's fair market value is actually less than $500, you can’t deduct more than the fair market value. In fact, the charity isn't required to prepare a Form 1098-C for you if the vehicle’s claimed value is $500 or less. In either case, you don't have to attach the form to your return.
Other information reported on Form 1098-C
Form 1098-C also reports the year, vehicle make and model, mileage reported on the date it was donated (in box 1) and the vehicle identification number. Your 1098-C also provides your full name, address and Social Security number. If you received any goods or services from the charity and there is information reported in boxes 6a, 6b or 6c, you may need to reduce your deduction by the value assigned to those goods and services.
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