Another good way to find out the value of your car donation is to look in local newspaper ads for "comparables" - models with similar wear and tear.


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The Kelley Blue Book can help you determine your vehicle's value when you are considering donating cars. In fact, a good car donation charity should provide a link from their website right to the KBB guide itself. It is a valuable first step in learning how to calculate value on vehicles. Start by logging on to http://www.kbb.com. [Click on: “Used cars” at top, and select the year, make and exact model of your vehicle, then press “GO”. Select "Private Party Value."] You also need to fill in the exact mileage on the car and the zip code in which you will be stating that you live on your tax return.


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Under new car donation IRS rules, you can only deduct up to the value for which a charity sells the donated vehicle, unless the charity keeps and uses the vehicle, or makes material improvements to the vehicle before selling it. Find out whether the charity will be retaining and using the vehicle, or making improvements to the vehicle before re-selling it. If so, use fair market value. If not, then the charity will provide you with and accounting of the price at which it sold the vehicle, and you can deduct that amount from your annual federal taxes.


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Several years ago, the General Accounting Office reported that many charities, using third party vendors in their car donation programs, received as little as 5% of the amount claimed as a deduction on the donor's tax return. While the 2005 changes to IRS guidelines for vehicle donations aims to ensure that charities derive more benefit from donations, it is still wise to investigate your car donation options to be sure the greatest amount of benefit goes to your chosen charity. Be just as informed about your automobile donation as you would be with a cash donation: if the charity does not accept your vehicle directly, ask about the dollar amount or percentage received by the charity.


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