"The attraction is just getting it out of the driveway without the hassle of trying to sell it and having strangers coming to your door," Kindelan said.
The price of that convenience can be high, however, particularly for taxpayers in lower brackets. (See sidebar.)
The Red Cross does not attempt to set a value on a car unless it is expected to exceed $5,000, when IRS rules require an independent appraisal. Instead, the charity uses the Kelley Blue Book auto guide to provide donors with a high and low value for their make and model. It is up to the donor to determine how much to deduct, Kindelan said.
"How aggressive one wants to be on a tax return is a very personal decision," Kindelan said.
Tax law says deductions for noncash contributions such as vehicles, household items and clothing cannot exceed the property's fair market value--defined as the price a willing buyer would pay a willing seller when neither one is under any pressure to buy or sell.
Finding the fair market value is no easy task, however.
Take the example of a single car: a 1989 Honda Accord LX Sedan with standard features. Kelley Blue Book lists the price at $5,780 on its Web site, saying that is the starting point at which most dealers will begin to negotiate for a car in good condition.
Edmunds Publications values the car much lower, saying the market price at which the car is actually likely to be sold is closer to $3,690. Recent prices for a similar car in Auto Trader, a national car advertiser, ranged from $2,600 "or best offer" for a high-mileage version to $4,995 for a vehicle being offered by a dealership, with most sellers listing prices from $3,400 to $3,800.
Taxpayers should be prepared to back up whatever price they use for a deduction with photographs of the car, advertisements for similar cars and price guide quotes, tax preparers said.
Eva Rosenberg, an Encino enrolled agent and author of an online newsletter called "Tax Mama," says she tells her clients to use the low end of the Blue Book value if the car has high mileage or other problems, and the higher value if it runs well, has low miles and special features. She requires them to document the value with a receipt and a photograph of the car.
"I have the client clean up the car and take a good picture of it in its best light," Rosenberg said. "Then I attach the charity receipt, the Blue Book valuation they provide and an explanation of how we arrived at the amount."
