Our taxable joint income is roughly $75,000. We gifted an item appraised at $45,000 to a university. How will this affect our 2017 taxes.

[asledge1]

We have one dependent.

[SweetieJean]

Do you have a written appraisal from a qualified appraiser for that?

[asledge1]

Yes. From a certified appraiser.

[SweetieJean]

<a rel="nofollow" target="_blank" href="https://www.irs.gov/pub/irs-pdf/f8283.pdf">https://www.irs.gov/pub/irs-pdf/f8283.pdf</a>

[Opus 17 · Accepted solution]

In most cases, universitys are "50% charities."  That means you can deduct up to 50% of your adjusted gross income as a charitable deduction.

Assuming you have no other front page additions, your AGI will be close to $75K meaning you can deduct 37.5K as an itemized deduction on schedule A.  You may also have other itemized deductions such as mortgage interest and property taxes.  If filing jointly, that brings you down into the 15% bracket, so you will probably save roughly $5000 over the previous year.  For a more precise estimate try these calculators.

https://www.irs.gov/individuals/irs-withholding-calculator

https://turbotax.intuit.com/tax-tools/calculators/taxcaster

The unusable donation amount (($7500) will carry forward to next year.

As suggested above, you will need a signed appraisal, and a form 8232 signed by the appraiser and by a financially responsible official from the university.  You can e-file, but after e-filing you will be prompted to mail the original signed form 8232 to the IRS with a cover letter.

[Opus 17]

Also be aware of the "unrelated use" rule.

If you donate an item of personal property that will be used for a related use (like, donating a painting to an art museum for their collection) you can claim the fair market value.

But if you are donating an item that will be used for an unrelated use (like, donating a painting that will be sold at auction to raise funds) then you can only deduct THE LOWER OF the fair market value or your cost basis.  Your cost basis is what you paid, or the price paid by the person who gave it to you, or the value on the date you inherited it.  

So if you have a painting that cost your grandfather $500, and it was given to your mother who gave it to you, and it is now worth $45,000, and you donate it to the university's art collection, your charitable deduction value is $45,000.  

But if you donate it to a university auction to raise funds, your donation value is $500.  (In that case you would be better off selling it, reporting the profit as a long term capital gain and pay the tax, then make a cash donation.)  And if you inherited the painting from your mother 15 years ago when the value when $30,000, then that is your tax deduction value.

[Opus 17]

Incidentally, you report the entire value of the donation and let Turbotax handle the limitation and the carry forward automatically.