In the United States, an engagement ring signifies a commitment between two partners and marks their intention to marry at a later date. Because engagement rings are typically made from precious metals and stones, the price can range from several hundred dollars to several thousand dollars. Whether you may claim an engagement ring as a tax deduction depends on individual circumstances.
Purchasing a Ring
If you plan to propose and purchase an engagement ring to seal the deal, you may not deduct the cost of the ring from your taxes. An engagement ring is considered a capital gains item rather than a household item, making it ineligible for deduction purposes.
Donating a Ring
You may donate an engagement ring to a charitable entity if, for instance, your engagement ended without marriage or if you divorced and no longer want to keep the ring. In most cases, the donation represents a charitable contribution that you can deduct from your tax liabilities for the year in which you donate the ring. However, to claim the ring as a tax deduction, the charitable organization must be able to use or sell the ring. Contributions that a charitable entity cannot use are not tax deductible.
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The amount you can deduct from your tax liability depends partially on the value of the ring. Obtaining a certified appraisal of the ring might help you maximize your tax deduction if the ring has increased in value since purchase. The cost of the appraisal is not included in the charitable contribution deduction; however, you may deduct the cost of the appraisal as a miscellaneous deduction.
The Internal Revenue Service only allows you to claim the appraised value of a donated engagement ring if you have had possession of the ring for more than one year. Otherwise, you may only deduct the purchase price of the ring after donating it to a charitable entity. Also, if the value of the ring exceeds 50 percent of your adjusted gross income for the year, you may only deduct the portion of the value that is equal to 50 percent of your adjusted gross income, minus the value of any other charitable contributions claimed for the same tax year.