Charitable Contributions And Deductions - Appraisals and Substantiation Requirements
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.
- 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.
- 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.
- 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.
- 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.
- Property deductions exceeding $5,000 - Written appraisal is required from a qualified appraiser.