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Substantiating Charitable Contributions

By Michelle E. Botwinick, C.P.A.
It’s never too early to get your tax records in order for this year, especially when the IRS has proven many times that it is serious about the documentation necessary to support charitable contribution deductions.
For a contribution of cash, check, or other monetary gift, regardless of amount, you must maintain a bank record or a written communication from the donee organization showing its name, plus the date and amount of the contribution. A canceled check is acceptable as a bank record. Any other type of written record, such as a log of contributions, is insufficient.
If the contribution is $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 the sum of the contributions to the same charity totals $250 or more in a year.
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. But 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 only 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 asking for the donation or when receiving it, that tells you the value of those goods or services. Be sure to keep these statements.
For a contribution of property other than money, you generally must retain 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.
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 is not allowed. You are usually required to obtain a qualified appraisal for donated property with a value of more than $5,000 and to attach an appraisal summary to the tax return. There are additional requirements for donations of more valuable items and special requirements for donations of vehicles and boats.
Are you a volunteer for a charitable organization? Although you can’t deduct the value of services you perform, some deductions are permitted for out-of-pocket costs you incur. 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. You should also 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.
Documentation is the key to getting all the deductions you are entitled to, resulting in a lower tax bill next April!

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