Why A Qualified Appraisal
When items such as art pieces (with a value over $20,000), gems and jewelry, and household goods (with a value over $500) are donated, they require a qualified appraisal. Why? Because a qualified appraisal allows for their actual worth to be determined accurately. The other reason why donated non-cash items require a qualified appraisal is to ensure that the donor is receiving the maximum tax deduction allowed for that item.
During such an appraisal the Internal Revenue Service (IRS) requires Form 8283 to be filed so that contributions can be used as itemized deductions on taxes. As per the IRS, a qualified appraisal has to be conducted for any non-cash item that is valued at more than $5,000. This is to ensure that the donor is receiving the proper tax deduction for the item.
A qualified appraisal has to be carried out by a qualified appraiser. One who is certified or licensed in the field of appraisal, or who has experience and knowledge of the type of item being appraised. The appraisal must also include a detailed description of the item, as well as the estimated fair market value of the item.
In addition to the IRS requirements, it is important to have an appraisal in order to ensure that the donor is receiving the maximum tax deduction allowed for the item. The appraised value of the item may be higher than the donor’s initial estimate, which could result in a higher tax deduction.
Furthermore, the appraiser can provide additional information about the item, such as its history, condition, and potential market value. This information helps determine the item’s true value. Equipped with this information the donor is able to receive the maximum possible tax deduction for the contribution.
Along with non-cash contributions being appraised they must also be in good condition in order to be accepted by the charitable organization. Any item that is donated must be usable by the organization. If the organization does not find the item to be in good condition, it may reject the donation.
When it comes to non-cash contributions, there are many factors to consider before making a donation. It is important to consult with a qualified tax advisor in order to determine if an appraisal is necessary and if the item is usable and in good condition. Non-cash contributions can be a great way to give back and help those in need, but it is important to make sure that the donation is properly documented and accepted by the organization.
Why File IRS Form 8283
Now that it is clear why an appraisal of non-cash charitable contribution is necessary, let’s try and understand the role Form 8283 plays in such an appraisal.
Taxpayers use Form 8283 to report non-cash charitable contributions. It is important to have this form filled out because it helps the taxpayer to receive the tax benefits associated with the gift.
There are two parts of the Form — Part I and Part II. Part I is for taxpayers to report information about the donated property, such as its appraised value, the date of the donation, and the fair market value of the property. Part II is for taxpayers to report information about the qualified appraiser, such as their name, contact information, and credentials.
In addition to helping the taxpayer receive the tax benefits associated with the donation, Form 8283 also helps the IRS verify the accuracy of the taxpayer’s information. For instance, if the IRS believes the value of the donated property is too high, they may request additional documentation from the taxpayer, such as a qualified appraisal.
An accurately filed Form 8283 helps the IRS to easily access the information they need. Finally, Form 8283 is also important for taxpayers because it helps them keep a record of their non-cash donations. This can be beneficial when filing taxes since these donations are tax-deductible. Looking for online appraisal experts? Click here: Appraisily