It is often difficult for some people to determine the accurate value of the different gifts that they have given to charities or their family and friends. The resultant inaccuracies can result in problems with the tax authorities when the anomalies are discovered. This article discusses some tips that you can use to get an accurate value of your charitable gifts as you file your tax returns.
Get a Qualified Appraisal
Some items, such as real estate and pieces of art, may be hard to value because their perceived value can change on a daily basis. It is therefore advisable to get a professional valuation of that gift before you hand it over to the recipient. Make sure that the date of the valuation meets the guidelines given by the tax authorities.
Find the Average Stock Price
You may wish to give away some of the stocks that you hold in a publicly traded entity. How can you determine the value of such shares? Get the trading records for the day when you offered the gift. Use the average of the highest and lowest trading prices for those shares on that day. Record that average price on your tax forms.
Have Bank Records
You should always rely on the bank records when you are giving the value of any cash gift that you made. That bank record will provide irrefutable evidence that you offered that gift to the recipient. Avoid offering gifts without a bank paper-trail because such a gift may be queried by the tax authorities.
Visit Thrift Shops
Some gifts may take the form of used items, such as clothes and household appliances. Some of those gifts may qualify for tax benefits. You can estimate their fair market value by visiting thrift shops so that you find out at what price items in a similar condition are sold. Alternatively, you can contact charities that have reference guides for the value of the used items that they receive.
Refer to Company Records
You may have asked a company to donate some shares on your behalf. Refer to the form that the company filed regarding that gift. Use the valuation that was given on that form as you file your own tax forms so that there is no contradiction.
You will have no issues regarding the valuation of gifts that you make during a tax year if you implement the suggestions above. You can also reduce the likelihood of having problems with the tax authorities by hiring a tax accountant. That professional will give you important advice on several issues, such as the timing of your gifts, so that those gifts are reflected in that tax year.
Share18 July 2017
Hello! Welcome to my tax blog. My name is Phillip, I am a businessman who lives in Sydney, Australia. Last year, I realised that my tax bill seemed very high. My friend suggested that I contact a tax service who would be able to offer help and assistance in rearranging my tax liabilities. I was a little unsure, but I took my friend's advice. The advisor was great. He looked over all of my financial data and recommended some minor changes I could make which could drastically reduce the amount of tax I would owe. I hope you like this blog and find it useful.
