Exemption for Spouse

• You cannot deduct the cost of an engagement ring from your income when you file your income tax. On the bright side, you also don't have to pay gift tax on an engagement ring since gift tax only applies to the transfer of property without the expectation of receiving something of at least equal value in return. Hopefully, you expect the person you gave the engagement ring to become your spouse, and she should be of at least equal value to the ring. Once you get married, you can claim your spouse as an exemption when you file your income tax return.
  
  

Charitable Contributions

• You may claim a deduction for the fair market value of an engagement ring if you donate the ring to a qualified charitable organization. If the fair market value of the engagement ring is $250 or more, you must get a written receipt from the receiving organization that includes a description of the ring and whether the organization provided any goods or services to you in return for the donation. You may only claim a deduction for charitable contributions if you itemize your deductions.
  
  

Casualty Loss

• You may be able to deduct the fair market value of an engagement ring as a casualty loss if it is lost or damaged due to a an identifiable event that is sudden, unexpected, or unusual. IRS Publication 529 gives the example of a car door slamming on your hand, causing the diamond in your engagement ring to be jarred free from its setting. If the diamond is lost and never recovered, it may be considered a casualty loss. You must itemize your deductions to claim a casualty loss. If you lose your engagement ring by misplacing it, the loss is not deductible. Any loss that is reimbursed by insurance is not deductible.
  
  

Other Deductions

• You can deduct the cost of maintaining a safe deposit box where you keep your engagement ring, provided the safe deposit box is also used to store investment-related documents such as taxable income-producing stocks or bonds. A safe deposit box that is only used to store jewelry is not deductible. You can deduct the cost of appraising the engagement ring in order to determine its fair market value as a charitable donation or for a casualty loss.