There's been a lot of talk lately about car donation programs -- you know, the ones where folks give old cars to charity and claim fat tax deductions.

About three quarters of a million people claim these deductions each year. But there's a growing concern that a lot more money is being written off on tax returns than is actually getting to the coffers of the charities. Part of President Bush's new budget, in fact, includes a proposal to require anyone who gives a car away to get a professional appraisal to set the value.

But that's only a proposal.

Don't let all this talk scare you away from a legitimate deduction if you donated a car in 2003. The real issue here is a concern that middlemen -- who in some programs actually collect the cars and sell them -- are taking a huge cut, leaving too little for the charity.

But that doesn't dilute the size of your deduction. The law says that, if you itemize, you can write off the full, fair-market value of your donated vehicle. Check local newspaper ads or visit Web sites such as Edmunds.com and Kelly Book Blue to get an estimate of your car's value. If your car was a cream puff, you can legitimately claim an above average value. If it was beat up, you should honestly report a below average value.

If you claim a deduction of more than $500, you need to include a Form 8283 with your return. On it you describe the car you gave away, when you bought it and how much you paid. If you claim more than $5,000, you do need an appraisal to back up your deduction.

MORE: Kiplinger.com | Your Money | Taxes | Column

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