A qualified appraiser must regularly prepare appraisals for which he or she is paid, and the individual must demonstrate verifiable education and experience in valuing the type of property being appraised. Property valued in excess of $5,000: In addition to the items needed for contributions valued at $500-$4,999, you must obtain a qualified appraisal of each item. For items that are worth less than $500, TurboTax has a neat tool to help you with donations of items that may be hard to value accurately.
For property valued at $250-$499: Again, you should have a receipt from the charity, but if more than one contribution of over $250 is made, you must have either a separate acknowledgment for each or one acknowledgment that shows all contributions. Additionally, the receipt or acknowledgement must be in writing, include a description of the property donated, and a good faith estimate of the value of any goods given. The taxpayer must also keep reliable written records for each item of contributed property that includes the name and address of the charity; the date of the contribution; a reasonable description of the donated item; the fair market value of the donated property and how that value was determined; the cost or other basis of the donated property; and the amount of the deduction that will be claimed. If the donated property is valued at less than $250 (not in total, but individually): you must receive and keep a receipt from the charitable organization showing the name of the organization, date and location of the contribution, and a reasonably detailed description of the property.
Property valued at $500-$4,999: In addition to all of the above, you must have additional information concerning how the property was acquired (gift, inheritance or purchase). Gifts of other non-cash items have requirements that must be met in order to substantiate the value of the donation. There are several categories of non-cash donations:
If you will itemize this year, you can utilize have a special charitable giving strategy. This strategy entails donating cash or investment assets into what is known as a donor advised fund. Donor-advised funds are tax-deductible financial accounts provided by 501(c)(3) nonprofit institutions who are approved, donor-advised fund sponsors. The funds are opened in the donor’s name, and they enable a donor to donate funds and get a tax-deduction immediately while deciding later which organization those funds will support. Most large investment firms offer such funds. Since the only taxpayers who will benefit in 2021 from making contributions of non-cash property are those who will itemize their deductions, it seems reasonable that these persons might be subjected to the increased audit activity that has been threatened by the Biden administration.
Check it out at turbotax.intuit.com/personal-taxes/itsdeductible/. Bear in mind that if you will take the standard deduction in 2021, these contributions of used property are not deductible as itemized deductions, but the charity still needs your donations.
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