by Cindy Toran, Tax Manager
What do we have to say about charitable deductions? Three words, SUBSTANTIATE, SUBSTANTIATE, SUBSTANTIATE!
“Honestly, I attend church every week (religiously) and give $20 cash when the offering plate is passed. So $20 times 52 weeks = $1040 charitable deduction.” Really? Not trying to cast any stones here; you have never missed a week of church while on vacation?
The IRS will disallow such a deduction. For cash donations the taxpayer must have either:
- Bank records (e.g., cancelled check or account statement) OR
- Written acknowledgment from the charity documenting the contribution amounts and dates received.
Obviously, for relatively small individual donations using a check may be preferable.
But it gets even more complicated…..
How about single donations of $250 or more? These must have written acknowledgment from the donee (organization receiving the gift). The gift must:
- Be received by either the date the tax return is filed or the extended due date, whichever is earlier. AND
- State whether any goods or services were provided in consideration for the contributions; and, if so, an estimate of their FMV.
What if I have payroll deduction contributions?
Substantiation would consist of and require a:
- Form W-2 or other employer document AND
- Pledge card or other document prepared by the charity.
What about all those household goods and used clothing (i.e., non-cash) items donated?
If <$250 value for each donation, you need a
- Receipt unless impractical to obtain (e.g., left at a drop box) AND
- Reasonably detailed description of item(s) donated, FMV, method of valuation, date and name of donee.
If the donated item is:
- >$249, you also must have an acknowledgment from the organization.
- $250-$500, acquisition cost, approximate date, and how acquired are additional requirements.
- >$5K, a written appraisal is also required.
Autos, Boats & Planes
Autos, boats and planes are the same as other non-cash donations; and, if the value is at least $250, Form 1098-C from the organization must be obtained.
Volunteer Out-of-Pocket Expenses
For volunteer out-of-pocket expenses receipts, cancelled checks or other written records are required. If the amount is >$249 considered separately (e.g., $250 airline ticket), an acknowledgement also mandatory.
Nonetheless, after all this information you may want to note …