Everyone has items that they don’t need taking up space in their homes. And, the right thing to do isn’t to toss them in the trash, but to donate them! Thankfully, when you do donate these items, you may qualify for a tax deduction, but it’s not as simple as deducting the value of the item. Instead, there are tricky rules that you must navigate to help you make your decision.
The Fair Market Value Question
When you give an item, you have to take into consideration its current condition when determining its value, as well as what the average person would generally and reasonably pay for this item. Age and the overall shape the item is in play a big role in helping you to make this decision, but even with all those things considered, deciding on a value that the IRS would agree with can be tricky.
That’s why it’s best to speak with a tax professional to help you find ways of reasonably determining value or, at the very least, to use an up-to-date tax program that can help you to come up with a safe value for deductions.
When in Doubt, Opt for an Appraisal
While fair market value can be helpful in determining the approximate value of basic items, like used clothing or home appliances, it doesn’t really work with more valuable things, such as cars or expensive artwork.
In these cases, it’s a good idea to have a professional appraisal or other valuation process performed. For some items and some values, the IRS may even require it. At the very least, having an appraisal, whether it’s required or not, provides you with some protection in the event of an audit. But, really, in cases like these, professional tax help is strongly recommended to ensure you’re as protected as possible.
Ultimately, giving charitable gifts is a
wonderful thing. But, if you’re going to deduct the worth of those gifts from
your taxes, you’ll need a little help, or at least a little research and
effort, to ensure you report everything correctly.
No comments:
Post a Comment
I welcome your comments here :)