Failure to File Form 8283 — 5 Drawbacks

What is Form 8283 Appraisal?

Form 8283 is a tax form that taxpayers in the US file to report charitable contributions of non-cash property. These include artwork, securities, real estate, and other such types of property.

Taxpayers must file Form 8283 if they have donated non-cash property worth more than $500 to a qualified charitable organization during the tax year. If the total deduction claimed for non-cash contributions is more than $5,000 a Form 8283 appraisal is a must.

Some essential requirements of the form include donor information, the recipient organization, and details about the property donated. These include the value of the property and the manner in which it was acquired.

Why File Form 8283?

The purpose of filing Form 8283 is to help the Internal Revenue Service (IRS) track donations of non-cash property. It also ensures that taxpayers are not overvaluing their donations to receive a larger tax deduction than what they are entitled to.

In addition to providing information about the donated property, Form 8283 also requires the donor to obtain a written appraisal of their property’s fair market value (FMV) if the total deduction claimed for all non-cash contributions exceeds $5,000. The appraisal must be completed by a qualified appraiser. One who is experienced and has knowledge about the current appraisal standards. The donor must attach a summary of the appraisal to their tax return.

The IRS uses Form 8283 to verify that the donation is legitimate and that the donor is entitled to the tax deduction claimed. If the IRS has reason to believe that a taxpayer has overvalued their donation, they may request additional information or may even audit the taxpayer’s return.

That is why it’s important for taxpayers to keep accurate records and maintain proper documentation. This includes all non-cash charitable contributions that they have made. This includes photographs, receipts, and any correspondence with the charitable organization. The IRS can request any of this information in the event of an audit.

5 Drawbacks for Failure to File Form 8283 – Appraisal Impacted

Filing Form 8283 and obtaining a qualified appraisal of donated property is an important step in ensuring compliance with the tax code and avoiding potential issues with the IRS. Failure to complete Form 8283 during a qualified appraisal can result in several disadvantages for taxpayers. Let’s discuss 5 drawbacks of not filing Form 8283 during a qualified appraisal.

1. Risk of IRS Audit and Penalties

When taxpayers donate non-cash property to qualified charitable organizations, they are entitled to a tax deduction for the FMV of the property at the time of the donation. However, the IRS closely scrutinizes non-cash contributions. This is done to ensure that the FMV has been accurately determined. If a taxpayer fails to file Form 8283 or obtain a qualified appraisal of the donated property, they may be at risk of an IRS audit and potential penalties. These could include fines or even criminal charges if the IRS determines that the FMV was overstated.

2. Loss of Tax Deduction

Failure to file Form 8283 and obtain a qualified appraisal can result in a loss of tax deduction for the donated property. The tax code requires that taxpayers provide certain information about the donated property. Information that includes FMV of property and details of how it was acquired. Such pieces of information are required to claim a tax deduction. If this information is not provided or is inaccurate, the IRS may disallow the tax deduction altogether. This can result in a loss of tax benefits for the taxpayer.

3. Inaccurate Valuation of the Donated Property

The purpose of a qualified appraisal is to determine the FMV of the donated property. In the absence of a qualified appraisal, the taxpayer may not accurately value the donated property. This can lead to higher tax liability and potential penalties. Inaccurate valuations may also result in a lower tax deduction than the taxpayer is entitled to.

4. Difficulty Proving the Legitimacy of the Donation

When a taxpayer donates non-cash property, they must be able to prove the legitimacy of the donation in case of an audit. Filing Form 8283 and obtaining a qualified appraisal provides a paper trail. Without this documentation, the taxpayer may have difficulty proving that the donation was made and that the FMV was accurately determined.

5. Negative Impact on Future Charitable Contributions

Failure to file Form 8283 and obtain a qualified appraisal can have a negative impact on future charitable contributions. Most charitable organizations rely on donations from individuals to fund their operations and programs. If a taxpayer is audited and their tax deduction is disallowed, they may be less likely to make future donations. This can have a negative impact on the functioning of the charitable organization and the individuals and communities that rely on its services.

Qualified Form 8283 Appraisal from Appraisily

A qualified appraisal is an important part of making a charitable donation. The appraisal provides an estimate of the value of the donated item, which is necessary for determining the amount of the tax deduction. This is critical for donors because it helps them to maximize their deductions and minimize their tax liability.

Additionally, the IRS may require a qualified appraisal for donation amounts over a certain threshold. As such, it is important that donors obtain a qualified appraisal from a qualified appraiser whenever making a charitable donation. For professionally qualified appraisers get in touch with experts from Appraisily. They will guide you and help plan an appraisal for you as per your requirements.

https://www.irs.gov/instructions/i8283