Within the annual limit set by the Internal Revenue Service (IRS), you are oftentimes able to deduct the full amount of your itemized charitable donation for 2022. When it comes to high-value donations, you may need to prove the fair market value (FMV) of your donation. In order to adequately prove the value of donated property with a value in excess of $5,000, you will need a qualified appraisal.
There are some items for which a qualified appraisal is not required, including:
The reason for a qualified appraisal is to reduce or eliminate the possibility of tax fraud on an annual return. The IRS notes criteria for a qualified appraisal, including the following:
If making a high-dollar donation, a qualified appraisal is important. Tax fraud around charitable donations is common and IRS agents pay attention to appraisals that are not supported by or consistent with the facts of the donation and its type. Taxpayers who overreport the value of their deduction are assessed fines of between 20 and 40 percent of the amount of underpaid tax.
Charitable donations are important tax and philanthropic tools. If you have questions about donations for the upcoming tax year, speak with an experienced tax attorney.
The skilled tax lawyers at Robert J. Fedor, Esq., LLC deliver strong legal services for those facing tax litigation, payroll tax issues, offshore tax, or compliance questions. We work with local and international clients from offices in Cleveland and Chicago. Call 800-579-0997 or contact us online today.