Donating an old or little-used vehicle to charity is a win-win idea but you have to make sure you satisfy IRS's 2005 conditions in order not to get an audit, as explained in Part 1 of this article. Here are the other conditions:

2) If your vehicle is used by the charity in their daily operations, you can deduct its "fair market value" but it has to be a "significant intervening use." For example, if the charity is using your donated vehicle to deliver meals-on-wheels and registers over 10,000 miles a year, then that counts as a "significant intervening use."

3) You can also deduct the "fair market value" if the charity has made repairs and improvements that significantly increased the value of the vehicle. And a paint job or new tires do not count as an "improvement." A new engine or transmission would be more like it.

4) You can also deduct a "fair market value" if the charity, instead of wholesaling it, gives the vehicle to a poor person either for free or well below its market price.

5) And here is how "fair market value" is defined… Usually, most standard car price guides like Kelley Blue Book lists three prices for a vehicle, independently of its condition: Trade-in, Private-Party, and Dealer Retail. If the above conditions apply, you can deduct the PRIVATE-PARTY price from your taxes.
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You need a written letter of donation from your charity if the vehicle's value is over $500.

These are the forms you need to use to deduct your vehicle's worth from your taxes: IRS Form 1098-C (Contributions of Motor Vehicles, Boats, and Airplanes) and Form 8283 (Noncash Charitable Contributions).

If you claim that the value of your donated vehicle is over $5,000 then you need a written independent appraisal to back up your claim.