Ascertaining your car's value is not just a matter of flipping through the Kelly Blue Book and finding your make and model. You have to take a number of factors into account before filling in that donation on your tax form. First you can access kbb.com or another car assessment service and look at the private party valuation for your care, and then plug in your car's details. It is important that you list the car's condition here, whether it is in spit spot condition or rather worse for wear. The ultimate fair market value depends on what the charity can get for it.
The IRS will only allow you to take the actual "gross proceeds" from the sale of the car.
As part of the Jobs Creation Act of 2004 the government tightened up reporting of used car donation. The charity must take your social security number along with the donated car. They then have up to thirty days after it sells to tell you how much they got for it. You can only deduct the gross return from that sale. One charity says the average car donation sells for $500 - $600. So if the Kelly Blue Book value is $2500 but the charity only got $800, you can only deduct the $800.
It is important to document your findings. Print out the online reports that helped you ascertain your FMV for use in backing up your deduction. Appraisals for cars valued at less than $5,000 are not necessary. Over that amount, however, will require an official appraisal from a qualified appraiser. It is a good idea to take pictures of your car to back up its condition and hold on to any repair and maintenance records.
If your car's FMV is less than $500
Get a letter or receipt from the organization, which includes the name of the charity, where and when you gave the car and a reasonable description of the car along with its FMV.
If your car's FMV is less than $5,000
You must have the acknowledgements stated above plus how you got the property and plan on filling out Section B of Form 8283 on your tax form. If you feel your FMV is edging up to the $5,000 limit, it might be a good idea to pay for an official appraisal to back up your claims.
If Lulu actually uses your car to pick up wayward kitties or bring them to the vet you can get proof from the charity and claim the FMV next year.