Charitable Contributions And Deductions - Appraisals and Substantiation Requirements

Appraisals
Taxpayers need to be prepared to support all high valued property deductions with a detailed proof of cost, the date of acquisition and how the value was appraised. If you are claiming a deduction exceeding $5,000 for an item, or for a similar group of items (baseball card collection, art pieces, coins, etc…), you generally need a written appraisal from a qualified appraiser. The appraiser must be unrelated to the party claiming the deduction, and sign a declaration on Form 8283 that they meet the requirements of a qualified appraiser. The appraisal must also be within 60 days of the date of your donation.

If donating the gross proceeds from a sale of publicly traded securities, non-publicly traded securities of $10,000 or less, intellectual property, business inventory or vehicles, an appraisal would not be required per an exception to the appraisal rule. All deductions exceeding $500,000 require an appraisal under all circumstances.

Substantiation Requirements

  1. Cash Contributions - The IRS has tightened their standards when it comes to cash contributions, checks, credit cards and exchange-traded fund (ETF) transfers. Regardless of the amount, they must be substantiated by a canceled check or a bank or credit card statement. A receipt from the charity showing the name of the charity, date and amount of the contribution is highly recommended.
  2. Non-cash contributions under $250 - A dated receipt from the charity containing a detailed description of the property is preferred. If depositing an item such as clothes at an organization's drop site and no receipt is available, proper documentation will be acceptable.
  3. Contributions of $250 or more - Requires a written receipt or acknowledgement from the charity. You may not rely on a bank statement or canceled check to satisfy the records requirement.
  4. Donations exceeding $500 (cars, boats, airplanes, motor vehicles) - Requires a written acknowledgement from the charity on Form 1098-C. Taxpayers will need to attach Form 8283 to their tax return or the IRS may disallow the deduction.
  5. Property deductions exceeding $5,000 - Written appraisal is required from a qualified appraiser.
Charitable Contributions by Business Entities


Related Articles
  1. Personal Finance

    What You Should Know About Home Appraisals

    Home appraisals are an unbiased way to determine a home's value. Here is what you need to know about obtaining one.
  2. Home & Auto

    The Home Appraisal: Your Key to a Successful Refinance

    When you refinance your mortgage, everything hinges on the appraisal. Here's what appraisers look at, how to make your home look as valuable as possible and ways to fight back if the valuation ...
  3. Home & Auto

    6 Ways Homeowners Can Dispute an Absurdly Low Appraisal

    Count it as one of the most frustrating and disappointing of all real estate quandaries.
  4. Home & Auto

    The Home Appraisal: Key To A Successful Refinance

    An appraisal is a professional’s assessment of a home’s value that ensures banks don’t lend more money than a property is worth.
  5. Home & Auto

    7 Ways To Increase Your Home's Appraisal Value

    When it's time to sell your home – or refinance it – it will need to be appraised. Here's how to make sure the valuation is as high as possible.
  6. Personal Finance

    Your Heirloom Jewelry: How Much Is It Worth?

    You grandma's diamonds are now yours. Whether you plan to keep them or not, you first need an honest appraisal. Here's how to get one.
  7. Home & Auto

    What You Should Know About Home Appraisals

    The home appraisal is a key part of any loan-closing checklist. It’s an unbiased professional opinion of a home’s value.
  8. Taxes

    Give To Charity; Slash Your Tax Payment

    Being generous has never been more (financially) rewarding!
  9. Home & Auto

    Exploring Real Estate Investments: Finding Investment Value

    By Ian Woychuk, CFA Real estate returns are generated in two ways. First, the income return comes from tenants' rent payments. The income return is a straightforward calculation because all you ...
  10. Home & Auto

    How To Refinance If Your Home Appraisal Is Too Low

    When you take out a mortgage on a home or refinance an existing mortgage, most lenders want a loan-to-value ratio (LTV) of 80 percent or lower.
RELATED TERMS
  1. Qualified Appraiser

    An individual who has earned an appraisal designation from a ...
  2. Qualified Appraisal

    An appraisal document that is created, signed and dated by a ...
  3. Appraisal Approach

    A procedure for determining an asset's value. The appraisal approach ...
  4. Appraised Value

    An evaluation of a property's value based on a given point in ...
  5. Appraisal Capital

    A form of accounting adjustment. Appraisal capital is created ...
  6. Appraisal

    A valuation of property (ie. real estate, a business, an antique) ...
RELATED FAQS
  1. How is market value determined in the real estate market?

    Learn how fair market value is determined during a real estate appraisal and how market values are really decided by professional ... Read Answer >>
  2. Which is better for tax deductions, itemization or a standard deduction?

    Each deduction that you claim may result in a decrease in the amount of taxes that you owe. However, whether you receive ... Read Answer >>
  3. How do I know whether to itemize deductions or take the standard deduction?

    Taking the standard deduction is the easiest and most common method chosen by filers, but many taxpayers may wind up paying ... Read Answer >>
  4. What is the underwriter's job in a real estate transaction?

    Find out why the underwriter may be the most important person in your real estate transaction, and learn what information ... Read Answer >>
  5. What credit card fees are tax deductible?

    Learn about some of the unexpected tax deductions for fees incurred through credit card purchases for both individuals and ... Read Answer >>
  6. An appraiser forms the following estimates for a rental property ...

    Free info on financial certification exams including study guides, exam questions, and much more! Read Answer >>
Hot Definitions
  1. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  2. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  3. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  4. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  5. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  6. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
Trading Center