It was the apple of your eye, a beautiful, gleaming beauty of a car that paraded your new wife from the church to your new home after your wedding. It chauffeured each of your newborn children home from the hospital after their births. The memories of that 1973 Olds Cutlass Supreme are priceless – to you. The IRS, however, may not view the value in the same way now that its service to your family has come to an end and you are donating your now rusted golden chariot to a charity.

Many people are catching onto the idea of donating their old vehicles to charities, helping out both the charities and themselves with a tax deduction. If you are considering this, there are some things to know:

The value to deduct on your tax return is the fair market value of the vehicle, NOT a car-pricing services amount, such as in Kelley Blue Book. Check area newspapers for similar autos in similar condition. Fair market value is the price a buyer is willing to pay. IRS Publication 4303, A Donor’s Guide to Car Donations, is very helpful. (For Charity use, see Publication 4302, A Charity’s Guide to Car Donations.)

Take pictures of your auto from several angles and get a mechanical evaluation to verify the value. Keep all records of this transaction. You will need them in the event of audit.

For any vehicle donations valued at $250 or more, you will need a written verification of receipt from the charity. For values over $5,000, you must obtain a written appraisal from a qualified appraiser.

The IRS encourages gifts to charities. IRS Commissioner Mark W. Everson elaborates, "Supporting charitable activities through tax deductible contributions is an important element of tax law and serves the national interest. But we encourage people to proceed carefully when donating vehicles." The IRS and Congress are closely examining the used car donation issue, as many deductions are found to exceed the value of the vehicles. Don’t get caught overstating the value.