The Internal Revenue Service allows you to deduct the fair market value of your donated car from your adjusted gross income. To take advantage of this tax break, you must itemize your deductions on your taxes. If you take the standard deduction, you cannot take advantage of the tax deduction. The IRS provides the following guidelines and information regarding car donation and taxes:

Itemize in Order to Benefit. Many taxpayers can’t take a deduction for car donations because they don’t itemize deductions on their personal tax return. For taxpayers, the decision to itemize is determined by whether their total itemized deductions are greater than the standard deduction (for 2003, the standard deduction will be $4,750 for single; $9,500 for married filing jointly). Just under one-third of the nearly 129 million individual taxpayers itemized in 2000, the last year for which complete data is available.

Calculate the Fair Market Value. The donor must take many factors into consideration to establish the value of the car. Many used-car buying guides contain step-by-step instructions so that readers can make adjustments to the value of a car for accessories, mileage and other indicators of its general condition. Both IRS Publication 526, Charitable Deductions, and IRS Publication 561, Determining the Value of Donated Property, provide detailed instructions.

Deduct Only The Car’s Fair Market Value. Some car donation program operators have mistakenly claimed that donors can take the full “Blue Book’’ value of their car for a deduction. The IRS, however, will only allow a deduction for the fair market value of the car. Fair market value takes into account many factors, including the vehicle’s condition. The fair market value of the taxpayer’s car may be substantially different from the “Blue Book” value.

Document the Charitable Contribution Deduction. For vehicle donations, taxpayers must document the car donation and its fair market value. Recordkeeping requirements are comprehensive and vary depending on the amount of the contribution and the total amount of the charitable deduction. IRS Publication 526 details requirements for the types of receipts taxpayers must obtain and the forms they must file.

Contact State Charity and IRS Officials When in Doubt. Donors with questions about whether a contribution is deductible should call the IRS at 1-800-829-1040 or for TTY/TDD help, call 1-800-829-4059. Donors concerned that contributions are being solicited for fraudulent purposes should contact the appropriate state charity official, who is often located in the state attorney general's office. A list of state charity official offices can be found online at www.nasconet.org, and a list of state attorneys general can be found at www.naag.org.