Frequently Asked Questions about Tax Deductions

1. How much of a tax deduction can I take if I donate my car to Wheels4Hope?
   It depends. Wheels4Hope will either use your car as a Program car or a Retail car. If we use your car as a Program car, you will be able to claim Fair Market Value for your deduction. If we use your car as a Retail car, you will be able to claim the amount for which Wheels4Hope sold your car.
2. What is a Program car vs. a Retail car?
   A Program car is a vehicle that we place with one of our clients who has been referred to us from one of our partner agencies. A Retail car is a car we sell to finance our mission of providing low-cost, reliable transportation to families and individuals in need. Rest assured, even if your car is not used as a Program car, approximately 95% of your car's value goes directly to supporting our mission and ministry.
3. Can I designate my car as a Program car or Retail car?
   No, we will make the determination based on your car's condition, age, mileage, and suitability for a client on our waiting list.
4. When will I know what tax deduction I can take?
   To comply with IRS regulations, we will send you a letter within 30 days of your donation if we use your car as Program car. If we use your car as a Retail car, we will send you a letter within 30 days of the sale to notify you of the amount of the sale.
5. What if you don't sell my car before I need to file my taxes?
   Wheels4Hope will make every effort to process all cars received in a year before April 15 of the following year. However, it may not be possible to complete sales for all cars received in 2005 by the filing deadline. If you need to file your taxes before you have received a sale price from us, we recommend you claim the minimum $500 deduction. Once we have sold your car, we will send you the above mentioned letter and you may choose to amend you tax return.
6. Other non-profits that take car donations can tell me the amount of my deduction in a week or two. Why does Wheels4Hope take so long?
   Many other non-profits accepting car donations sell their cars at auto dealer auctions. This can be done very quickly, but the car is sold for its wholesale value, which brings much less than the car's retail price. Further, the non-profit only gets a very small percentage of the sale price. The tradeoff is time vs. a larger tax deduction for you and more of your car's value helping someone in need.
7. If my car is a Program car, how do I determine Fair Market Value?
   The fair market value of a vehicle must not exceed the private party sale price found in a used vehicle pricing guide. Without endorsing any specific guide, examples are the NADA, Kelly Blue Book, or Edmonds. Please note that according to IRS regulations, the dealer retail value listed in the guide is not an acceptable measure of fair market value.
8. This seems complicated. Why?
   The law was not written for an organization that operates like Wheels4Hope. We use 100% of our vehicles to support our mission-either as a placement with a family or to finance repairs, tools, or rent for our garage and storage lot, etc. We do not use an auction house to sell any of our cars; we do direct retail sales from our car lot. We are working to try and get an exemption for our donors from the unintended consequences of the law. Hopefully by the time you are ready to donate your next car, the exemption will be in place.