- 1). Find out the fair market value for the car you are planning to donate. Laws have been put in place within the past several years that make knowing the fair market value of a donated car an integral part of the process. Find the fair market value through the Kelley Blue Book. It is easy to find if you have the make, model, and year of the car.
- 2). Learn about the tax laws regarding the donated car and find out how they will affect you. Your car will either be ranked as under $500 or over $500, depending on the fair market value. If your car is valued at $500 or less, you will use that value for your tax deduction.
If your car is worth over $500, you have several options. You can donate your car to a charitable organization and allow them to sell it, and then deduct their selling price on your taxes. You can also donate the car to a charity that will use the car as part of their charity work. If this is the case, you can use the car's fair market value as your deduction price. - 3). Do the math and find out which most benefits you according to what you can claim on your taxes. If there is one organization that you really want to donate to but you will not receive as much of a return from it, find out how the organization will use the car and whether or not the charity effort alone is worth the price. If you are very passionate about one organization and would love for your car to go to them, take that into consideration and determine whether or not it is worth taking a bit of a cut.
- 4). If you are unsure of what is the best benefit for you, consider selling your car yourself and donating the money to the charity of your choice. This way, you can sell the car at its fair market value and donate as much as you like to the organization(s) of your choice. The monetary donation you make still counts as a tax deduction.
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