If you make charitable contributions and deduct them on your tax
return, there are requirements to substantiate such charitable contributions.
If the contribution is $250 or more, you'll need a written receipt from the
charity. If you donate property valued at more than $500, additional
requirements apply. Here are the details.
General rules. For each check that is written for less than $250, a copy of
your cancelled check will be considered adequate substantiation of your
contribution. For a contribution of cash
or other monetary gift, regardless of amount, you must obtain a written
communication from the donee organization showing its name, plus the date and
amount of the contribution. Any other type of written record, such as a log of
contributions, is insufficient.
For a contribution of property other than money, you generally
must maintain a receipt from the donee organization that shows the
organization's name, the date and location of the contribution, and a detailed
description (but not the value) of the property. If circumstances make
obtaining a receipt impracticable, you must maintain a reliable written record
of the contribution. The information required in such a record depends on
factors such as the type and value of property contributed.
If the contribution is worth $250 or more, stricter
substantiation requirements apply. No charitable deduction is allowed for any
contribution of $250 or more unless you substantiate the contribution with a
written receipt from the donee organization. You must have the receipt in hand
when you file your return (or by the due date, if earlier) or you won't be able
to claim the deduction. If you make separate contributions of less than $250,
you won't be subject to the written receipt requirement, even if your
contributions to the same charity total $250 or more in a year.
The receipt must set forth the amount of cash and a description
(but not the value) of any property other than cash contributed. It must also
state whether the donee provided any goods or services in return for the
contribution, and if so, must give a good-faith estimate of the value of the
goods or services.
If you received only "intangible religious benefits,"
such as attending religious services, in return for your contribution, the
receipt must say so. This type of benefit is considered to have no commercial
value and so doesn't reduce the charitable deduction available.
In general, if the total charitable deduction you claim for
non-cash property is more than $500, you must attach a completed Form 8283
(Noncash Charitable Contributions) to your return or the deduction isn't
allowed.
For donated property with a value of more than $5,000, you're
generally required to obtain a qualified appraisal and to attach an appraisal
summary to the tax return. However, a qualified appraisal isn't required for
publicly traded securities for which market quotations are readily available.
For gifts of art valued at $20,000 or more, you must attach a
complete copy of the signed appraisal (rather than an appraisal summary) to
your return. IRS may also request that you provide a photograph.
If an item of art has been appraised at $50,000 or more, you can
ask IRS to issue a "Statement of Value" which can be used to
substantiate the value.
Recordkeeping for contributions
for which you receive goods or services. If you receive goods or services, such as a dinner or theater
tickets, in return for your contribution, your deduction is limited to the
excess of what you gave over the value of what you received. For example, if
you gave $100 and in return received a dinner worth $30, you can deduct $70.
If you made a contribution of more than $75 for which you
received goods or services, the charity must give you a written statement,
either when it asks for the donation or when it receives it, that tells you the
value of those goods or services. Be sure to keep these statements.
Cash contribution made through
payroll deductions. You can
substantiate a contribution that you make by withholding from your wages with a
pay stub, Form W-2, or other document from your employer that shows the amount
withheld for payment to a charity. You can substantiate a single contribution
of $250 or more with a pledge card or other document prepared by the charity
that includes a statement that it doesn't provide goods or services in return
for contributions made by payroll deduction.
The deduction from each wage payment is treated as a separate
contribution for purposes of the $250 threshold.
Substantiating out-of-pocket
costs. Although you can't
deduct the value of services you perform for a charitable organization, some
deductions are permitted for out-of-pocket costs you incur while performing the
services. You should keep track of your expenses, the services you performed
and when you performed them, and the organization for which you performed the
services. Keep receipts, canceled checks, and other reliable written records
relating to the services and expenses.
As discussed above, a written receipt is required for
contributions of $250 or more. This presents a problem for out-of-pocket
expenses incurred in the course of providing charitable services, since the
charity doesn't know how much those expenses were. However, you can satisfy the
written receipt requirement if you have adequate records to substantiate the
amount of your expenditures, and get a statement from the charity that contains
a description of the services you provided, the date the services were
provided, a statement of whether the organization provided any goods or
services in return, and a description and good-faith estimate of the value of
those goods or services.
Please contact us if
you have any questions about these rules that you would like to discuss to help
ensure you get all of the deductions to which you are entitled.
