HOW TO DETERMINE THE VALUE OF YOUR VEHICLE DONATION
As of January 2005 the IRS made up a specific set of guidelines as to how a donor is to determine the value of their donated vehicle.
1. If the value of your vehicle is $500 or less, you only need a receipt from the non-profit stating you donated goods of that value with no other qualifying documents needed.
2. If the non-profit sells the vehicle for more than $500 without doing any significant repairs to it, we will mail you a notification stating the exact amount for which it sold, which is the value you state for your tax purposes.
3. If the non profit does either of the following you can take the full, private party market value
A. If the charity makes significant use of the vehicle to further its purpose or gives it to a needy person
B. If the charity makes significant material improvements.
IRS publication on tax deduction value
* Excerpt from IRS publication 4302, A Charity’s Guide to Car Donations:
“If a charity intends to make significant intervening use of or materially improve the car, the donor generally can deduct its fair market value.
“Significant intervening use means that a charity must actually use the car to substantially further its regularly conducted activities, and the use must be considerable. There is no significant intervening use if the charity’s use is incidental or not intended at the time of the contribution.
“Material improvement includes a major repair or improvement that results in a significant increase in the car’s value. Cleaning, minor repairs, and routine maintenance are not material improvements.
“The charity must provide the donor with a contemporaneous written acknowledgement of the donation. Without an acknowledgement, the donor cannot deduct the contribution.
(end of excerpt from IRS publication 4302, A Charity’s Guide to Car Donations)
Kelly Blue Book can be used by the donor to help determine the market value.
Excerpt from Kelley Blue Book: If you donate a car to a charitable organization, YOU must determine its fair market value. The fair market value of your vehicle cannot be determined by a charity, the IRS considers that to be a “conflict of interest.” Kelley Blue Book can help you determine your vehicle’s value.
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 Enter. 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.
To help further define your specific vehicle’s value, make sure you accurately select the options on your vehicle. These could include a sunroof, leather interior, power windows and door locks, etc. Check these boxes correctly according to your car and check all that apply.
The bottom box is entitled “Select Vehicle Condition.” Choose “Help Me,” which is the last box on the right. This is important in order to accurately get what the IRS deems as the “fair market value” for your vehicle.
After choosing “Help Me” click on the bottom button called, “Get Pricing Report.”
On this page you rate the following: Exterior Condition, Interior Condition,
Mechanical Condition, and other important factors in rating your vehicle’s current condition. Choose one rating for each. Do not skip any of these questions. Print this page to show the charity and the IRS that you took the vehicle’s current condition into consideration when placing a value on it.
When finished, click on “Get Pricing Report” at the bottom of the page. You will then receive the Kelley Blue Book “Private Party Value” for your car in its current condition. This will be the value you will use for your donated vehicle. You should print a few copies of this page for your tax records, the IRS and for the charity in which you are donating your vehicle. Make sure to take several photos of your vehicle for your files as well.
If the amount of your deduction for all non-cash gifts is more then $500.00, then you must file the IRS Form 8283: Non-cash Charitable Contributions (http://www.irs.gov/pub/irs-pdf/f8283.pdf) with your itemized tax return. A copy should be mailed to the charity or donation program.
The IRS requires that the charity or donation program verify your donation and file IRS Form 8282: Donee Information Return (www.irs.gov/pub/irs-pdf/f8282.pdf). You should be sent a copy for your records.
TAX INFORMATION FROM THE IRS
For information about determining the “fair market value” of a vehicle you can read “Publication 526 Charitable Contributions” at http://www.irs.gov/pub/irs-pdf/p526.pdf. You should read the entire publication. Be sure to read the section entitled “Contribution of Property” and a section called “Determining Fair Market Value.” Another section called “Cars, boats, and aircraft” will help you in situations when donating these types of properties. Another helpful IRS document is Publication 561, entitled, “Publication 561 Determining the Value of Donated Property,” located at: http://www.irs.gov/pub/irs-pdf/p561.pdf
RECORDS YOU MUST OBTAIN FROM THE CHARITABLE ORGANIZATION
When you make any non-cash contributions, you must get and keep a receipt from the charitable organization showing: Name of the charity, date and location of the charitable contribution, and a detailed description of the donation. This receipt also includes the charity’s tax identification number for your records.
(End of excerpt from Kelly Blue Book site)
GENERAL IRS INFORMATION ON CHARITABLE CONTRIBUTIONS
There are many good sites to get general information on how to determine the value of a deduction made to a non-profit. Here are a few links:
www.irs.gov/publications/p561/ar02.html
http://www.ehow.com/how_2084667_determine-fair-market-value-charitable.html