Hotel Voucher for Your Car? Say Goodbye to Your Tax Deduction.

Why That “Free Hotel Stay” From Kars4Kids Could Cost You Your Tax Deduction

At first glance, Kars4Kids’ offer of a “free” hotel voucher in exchange for donating your vehicle might sound like a win-win — you get rid of an unwanted car, help a cause, and enjoy a getaway. But here’s the catch: under IRS rules, that “free” gift is anything but free when it comes to your tax deduction.

The IRS Rule on Quid Pro Quo Donations

When you make a charitable donation and receive something of value in return — whether it’s a dinner, concert ticket, or hotel voucher — the IRS calls this a quid pro quo contribution. In such cases, you can only deduct the portion of your donation that exceeds the fair market value (FMV) of what you received.

For example:

• You donate your car to Kars4Kids.

• In return, they give you a hotel voucher worth $300.

• If your vehicle’s deductible value is $1,000, you can only claim $700 as a charitable deduction ($1,000 − $300).

Why This Matters

Vehicle donations can often qualify for the full deduction of the sale value — sometimes hundreds or thousands of dollars. But if you accept a hotel voucher or other premium gift, you’re legally required to subtract its value from your deduction.

That means the “perk” isn’t just lowering your tax benefit — it could also reduce the impact of your donation for the cause you thought you were helping.

A Better Way to Give Locally

If your goal is to help people in your community and receive the maximum legal deduction, choose a local charity that uses your car donation to support programs in Utah and Idaho without offering high-value premiums that eat into your deduction.

As the IRS puts it in Publication 1771:

“A donor may deduct only the amount of a payment that is more than the value of the goods or services received.”

Your generosity should go toward the cause — not toward a marketing gimmick that leaves you with less to claim and less going to charity.