Donating a vehicle is truly a noble cause and the reward is also immediate and special – a tax deduction. The tax deduction is quite tremendous and that is one of the reasons why vehicle donations are attracting so much of attention. One must keep in mind that you can deduct your contributions to charity only if you itemize deductions on your Schedule A of Form 1040. Another important point is you must take into account the limitations that apply to charitable contributions. The deduction cannot exceed 50% of the adjusted gross income. The next criteria are that the vehicle you are donating should be a qualified vehicle. A qualified vehicle is any motor vehicle that has been manufactured for the purpose of use on streets, roads and highways, a boat or an airplane. Vehicles that are held in inventory for subsequent sale to customers do not come under the category of qualified vehicles.

You will receive a written acknowledgment from the charity which will tell you what the charity has done with the vehicle. In most cases the charity would sell your vehicle. In that case your deduction is the amount they received from the vehicle sale. They would provide you the sale price of the vehicle in writing. You can claim the fair market value of the vehicle in case they do not sell your vehicle but use it for some program. So in this case you have a benefit so you may look out to donate to a charity which will be able to use your vehicle and this will give you added satisfaction.