IRS Form 1098-C – Donating a car, boat, or airplane to charity can be a rewarding way to support a cause while potentially reducing your tax bill. However, to claim a deduction for such contributions, you’ll likely encounter IRS Form 1098-C. This form is essential for reporting charitable donations of qualified vehicles valued over $500. In this guide, we’ll break down everything you need to know about Form 1098-C, including its purpose, filing requirements, and how it impacts your tax deductions. Whether you’re a donor or a charitable organization, understanding this form ensures compliance and maximizes benefits.
What Is IRS Form 1098-C?
IRS Form 1098-C, officially titled “Contributions of Motor Vehicles, Boats, and Airplanes,” is an information return used by donee organizations (charities) to report donations of qualified vehicles to the IRS. A qualified vehicle includes any motor vehicle designed for public road use, such as cars, trucks, or motorcycles; boats; or airplanes. The form is required when the claimed value of the donation exceeds $500.
The primary purpose of Form 1098-C is to provide a contemporaneous written acknowledgment to the donor, which is necessary for claiming a tax deduction over $500 under IRC Section 170(f)(12). For donations valued at $500 or less, the form isn’t mandatory for IRS filing, but it can still serve as an acknowledgment.
Charities must issue this form to both the IRS and the donor, detailing the donation’s specifics, such as the vehicle’s description, sale proceeds (if applicable), and any goods or services provided in exchange. This transparency helps prevent inflated deductions and ensures accurate reporting.
Who Must File Form 1098-C?
Donee organizations—typically 501(c)(3) charities that accept vehicle donations—are responsible for filing Form 1098-C. A separate form is required for each qualified vehicle donation exceeding $500 in claimed value. Donors do not file this form themselves; instead, they receive Copies B and C from the charity and attach Copy B to their tax return if claiming a deduction over $500.
Exceptions include:
- Donations of vehicles held primarily for sale (e.g., dealer inventory).
- Contributions valued at $500 or less, though the charity may still provide an acknowledgment.
If the donor doesn’t provide a Taxpayer Identification Number (TIN), the charity checks Box 7, limiting the donor’s deduction to $500 or less.
Filing Requirements: When and Where to File
Charities must furnish the acknowledgment to the donor within 30 days of the vehicle’s sale (if sold) or the contribution date (if retained for use or improvement). For IRS filing:
- Electronic Filing: Encouraged for efficiency; use the IRS FIRE system.
- Paper Filing: Send Copy A with Form 1096 to the IRS by the due date.
- Due Date: Generally, January 31 of the year following the contribution for recipient copies, and February 28 (or March 31 if e-filing) for IRS copies.
For tax year 2025 (filed in 2026), use the April 2025 revision of the form. Always check IRS.gov for the latest version, as it’s a continuous-use form updated as needed.
Breaking Down the Key Sections of Form 1098-C
Form 1098-C is structured with boxes capturing donor, donee, and vehicle details. Here’s a detailed overview:
- Header: Includes the donee’s name, address, TIN, and phone; donor’s name, address, and TIN; and checkboxes for “VOID” or “CORRECTED.”
- Box 1: Date of contribution.
- Boxes 2a-2d: Vehicle specifics (odometer mileage, year, make, model)—applicable mainly to motor vehicles.
- Box 3: Identification number (VIN for cars, hull ID for boats, aircraft ID for planes).
- Boxes 4a-4c: Related to sales—4a certifies an arm’s-length sale to an unrelated party; 4b is the sale date; 4c shows gross proceeds (not reduced by expenses).
- Boxes 5a-5c: For non-sale scenarios—5a for material improvements or significant use; 5b for transfer to a needy individual below fair market value; 5c describes the improvements or use in detail.
- Boxes 6a-6c: Indicates if goods/services were provided (6a yes/no); their value (6b); and description (6c), with a checkbox for intangible religious benefits.
- Box 7: Checked if deduction is limited to $500 (e.g., value ≤$500 or no donor TIN).
| Box Number | Description | Purpose |
|---|---|---|
| 1 | Date of Contribution | Records when the donation occurred. |
| 2a-2d | Vehicle Details | Provides mileage, year, make, and model for identification. |
| 3 | ID Number | Unique identifier for the vehicle. |
| 4a-4c | Sale Information | Details if and how the vehicle was sold. |
| 5a-5c | Non-Sale Certifications | Explains intended use or transfer. |
| 6a-6c | Goods/Services | Discloses any quid pro quo. |
| 7 | $500 Limit | Flags deduction cap. |
This structure ensures all parties have clear records.
Tax Deduction Rules for Donors
As a donor, your deduction depends on how the charity handles the vehicle:
- If Sold (Box 4a Checked): Deduction is the lesser of gross proceeds (Box 4c) or fair market value (FMV) on the contribution date.
- If Retained/Improved (Boxes 5a or 5b Checked): Deduction equals FMV on contribution date, per Pub. 561 guidelines.
- Goods/Services Provided (Box 6a Yes): Reduce deduction by Box 6b value, unless only intangible benefits (Box 6c checked).
- Box 7 Checked: Maximum deduction is $500.
Always attach Copy B to your Form 1040 and consider Form 8283 for noncash contributions over $500. For e-filers, mail supporting docs with Form 8453.
Penalties for Non-Compliance
Charities face steep penalties under Section 6720 for false or untimely acknowledgments:
- For sales: Larger of gross proceeds or claimed value times 39.6%.
- For non-sales: Larger of $5,000 or claimed value times 39.6%.
- Presumed fraudulent if sold without required use/improvement within 6 months.
Donors risk deduction disallowance without proper documentation.
Recent Updates to Form 1098-C
As of 2026, there are no major changes to Form 1098-C. The latest revision (April 2025) maintains the continuous-use format, with updates posted on IRS.gov as needed. However, broader tax inflation adjustments for 2026, such as increased standard deductions, may indirectly affect overall tax planning.
Frequently Asked Questions About IRS Form 1098-C
What if I don’t receive Form 1098-C?
Contact the charity immediately. Without it, your deduction may be limited to $500.
Can I deduct more than the sale price?
Only if Boxes 5a or 5b are checked, allowing FMV deduction.
Is electronic filing mandatory?
No, but encouraged for charities filing multiple forms.
What vehicles qualify?
Cars, boats, airplanes—excluding inventory or non-qualified property.
How do I value my donation?
Use FMV from guides like Kelley Blue Book, reduced by any goods/services received.
Conclusion
IRS Form 1098-C plays a crucial role in facilitating tax-deductible vehicle donations while ensuring IRS oversight. By understanding its requirements, donors can confidently claim deductions, and charities can avoid penalties. Always consult a tax professional for personalized advice, and download the latest form from IRS.gov. Donating responsibly not only helps charities but also supports your tax strategy.