Write Off Value of Donated Car

— -- Have you heard the ads on the radio asking you to donate your old car to charity? If you help them with their good work, they say, you can claim a hefty tax deduction.

About 750,000 people do so every year. But there have been a number of news stories this year indicating that a lot more money is being written off on tax returns than is actually finding its way into the charities.

"Don't let that scare you away from a legitimate deduction. The real issue here is worry that middle men, who in some programs actually collect the cars and sell them, are taking a huge cut, leaving too little for the charity," said said Kevin McCormally of Kiplinger's Personal Finance magazine.

"The law says that if you itemize, you can write off the full, market value of that donated vehicle."

That's what car dealers call the "Blue Book value." You can find it on the web at kbb.com. A receipt showing the car's mileage on the day you give it away, and perhaps a photo of the vehicle might be helpful as documentation. But neither is absolutely necessary.

Click here for interactive tax explainers and calculators