A charitable donation appraisal is required for tax deduction purposes as per the guidelines laid down by the Internal Revenue Service (IRS). These specific rules and regulations regarding the appraisal of charitable donations must be followed for the donation to be tax-deductible.
The appraisal is used to estimate the fair market value (FMV) of a charitable donation. It becomes important for donors to get an appraisal done by a qualified appraiser. Why? Because after a qualified appraisal they can receive the full value of their tax deduction.
Donors are required to itemize deductions on their tax returns in order to qualify for a charitable deduction. This means that the donor must be able to provide the IRS with accurate information about the value of the donation.
This is where a charitable donation appraisal come in. It helps provide this valuable information to the IRS.
An appraisal helps to establish the donor’s intent to make a donation and provides evidence of the donor’s good faith. If the donor claims a deduction for a higher value than the appraisal, the IRS may question the donation.
The entire process of a charitable donation appraisal is a beneficial exercise. It is advantageous for both the donor and the charity in several ways. Here is a breakdown of some of the advantages of such an appraisal.
1. Provide Tax Benefits:
One of the main benefits of a charitable donation appraisal is that it can provide the donor with tax benefits. The appraiser prepares a written appraisal of the value of the donation at the end of an appraisal. This document helps the donor to deduct the FMV of the donation on their annual tax return. This proves to be a great way to reduce the amount of taxes owed on the donation.
2. Ensure Fair Value:
A qualified charitable donation appraisal helps ensure the donor is getting a fair market value for their donation. An appraiser during an appraisal is able to provide an accurate estimate of the actual value of the donation. This helps the donor be sure that they are not being taken advantage of.
3. Increase Donor Confidence:
The entire appraisal process after a charitable donation also helps increase the confidence of the donor in the charity that they are donating to. By having an appraisal carried out, the donor can be sure that the charity is using the donation in the most effective way possible. This helps ensure that the donor is comfortable with their donation and that the charity is being responsible with the funds received.
4. Increase Donor Satisfaction:
Finally, a charitable donation appraisal can help to increase the satisfaction of the donor. When donors know the true value of their donation, they feel better and satisfied about their decision to donate. This help create a long-term relationship between the donor and the charity.
The IRS does not accept the report of an informal appraisal from a donor. This is because an informal appraisal does not meet the requirements of the IRS for tax deduction purposes. A formal appraisal from a qualified appraiser is the only way to ensure that the donor is able to receive the full value of the deduction.
To sum up, a charitable donation appraisal is a great way of ensuring that the donor is getting a fair market value for their donation. The charity too after an appraisal feels that the funds should be used responsibly. An appraisal also helps provide tax benefits as well as increases the satisfaction of the donor. This is why it is important to consider having an appraisal done before making a charitable donation. For online professional appraisals click here: www.appraisily.com
Cited Sources
https://doeren.com/charitable-contributions-qualified-appraisal-valuation/
https://www.irs.gov/publications/p561
Continue Reading
Necessity Of An Art Appraisal For IRS Tax Deduction
Discover Antique Brown Jug Value: An Essential Guide
Antique Horse Bit Identification and Appraisal
Unlocking Automotive Heritage: A Guide to Old Ford Tools Identification and Appraisal
How to Accurately Identify Antique Garden Tools In 4 Simple Steps