The IRS advises that taxpayers contemplating car donations ask many questions and carefully consider just how much of the proceeds from the car will go to their intended charity. A recent federal study indicates that in many instances such vehicle contributions may help the intended charities far less than taxpayers. Indeed, the IRS reported that a California study revealed that 80 percent of charities contracting with fundraisers to run their car donation program received less than 60 cents for every dollar value of vehicle
The IRS advises that, before making a car donation, you make sure that the organization is qualified, that you speak directly to the charity, and that you examine state filings for more information.
To take advantage of the deduction, you must itemize your deductions on your tax returns, deduct only the car's fair market value, and document the charitable car donation.