Once you have made the decision to donate your car to charity, determine its value, so that you can know how much you can legally claim on your tax return. At first glance, this seems to be as simple as checking either the Kelley Blue Book or NADA price guides. However, as the IRS Guide to Car Donations makes clear, the amount of the deduction is limited to the fair market value, which is not always the same blue book value.
The best and most obvious, to determine fair market value if the way is charity to which you donate car sell and get cash. Once the organization has sold his car, which will provide the amount for which the car is sold. This then is the fair market value, and the IRS will penalize you if you misrepresent this amount in your deduction.
What if the charity does not sell your car? Start by consulting a price guide (see Resources below) to establish a starting point. All guides offer retail prices (car lot), a private entity (the price that would be paid to an individual) and wholesale price (the price that a seller pays for the car) pricing. As an example, use private party. This is the basis from which to start price, and from there, follow the guide's instructions for adding and subtracting factors such as options, mileage and overall condition. This is very close to fair market value, but check this with the local market.
Consult your local newspaper and online to verify that vendors in your area are asking for comparable prices. It also suggests that document with photos and receipts of any special equipment or repairs that have been made to the vehicle to increase its value.
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