Since 2005, when you donate a used car you can only claim the fair market value of the car. This means how much the car actually was resold for, or how much it is expected to sell for based on various considerations including mileage and condition. This change was made because some unscrupulous people were taking advantage of loopholes in the law.
So you might ask: What happens after I donate my car to charity? If you go through a reputable donation service such as CharityCarDonation.com, the answer is that we will handle the IRS paperwork for you. If we sell the car within 30 days, we’ll tell you how much it sold for so you can claim the right amount; if it isn’t sold within 30 days, we’ll tell you what the fair market value is for your tax purposes. This lets you claim the fair amount for your deduction without any hassles.