I found another question that said you can claim an appraisal fee as a tax credit. How do I figure out if it will be beneficial for tax obligation? Appraisal has been quoted at $800 which I will gladly pay if there is benefit for that and the deduction for item over 5,000. How do I start to figure this out?
Go to IRS Publication 561 Determining the Value of Donated Property - https://www.irs.gov/publications/p561#idm140501112136416
Cost of appraisals.
You may not take a charitable contribution deduction for fees you pay for appraisals of your donated property. However, these fees may qualify as a miscellaneous deduction, subject to the 2% limit, on Schedule A (Form 1040) if paid to determine the amount allowable as a charitable contribution.
Go to IRS Publication 561 Determining the Value of Donated Property - https://www.irs.gov/publications/p561#idm140501112136416
Cost of appraisals.
You may not take a charitable contribution deduction for fees you pay for appraisals of your donated property. However, these fees may qualify as a miscellaneous deduction, subject to the 2% limit, on Schedule A (Form 1040) if paid to determine the amount allowable as a charitable contribution.
So in most cases, the appraisal fee will not save you anything.
It is an Itemized Deduction, but it is in the category that is limited to the amount ?over 2% of your income. So unless you already meet that 2% threshold for other expenses (such as Job Expenses), it won't save you anything.
OK thank you. How do I figure out the tax savings from the charitable contribution? Because that would be the overall benefit then if no credit for the appraisal fee, if it is possible, because of the appraisal, to claim charitable donation at or over 5,000 (although I guess that is also the risk, if appraisal does not actually come back at what is expected)
You would have to determine first your Adjusted Gross Income (AGI) for the year. Once you have the AGI then only the fees over 2% of your AGI can be deducted as a Miscellaneous Itemized deduction on Schedule A.
For example - If your AGI is $50,000 then 2% of the AGI would be $1,000. So only the fees which total over $1,000 can be deducted. Then your total Itemized deductions on Schedule A would have to be greater than the standard deduction for your filing status to have any tax benefit.
Standard deductions for 2017
Single - $6,350 add $1,550 if age 65 or older
Married Filing Separately - $6,350 add $1,250 if age 65 or older
Married Filing Jointly - $12,700 add $1,250 for each spouse age 65 or older
Head of Household - $9,350 add $1,550 if age 65 or older