Charitable Giving, Tax and Financial Articles

Substantiating Charitable Contributions

The tax code encourages charitable giving by allowing individuals to claim then as itemized deductions. However, in order to sustain these deductions in an IRS audit, it is important to be mindful of the substantiation rules.

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 charity showing its name, plus the date and amount of the contribution. For a contribution of property other than money, you generally must maintain a receipt from the charity showing its name, the date and location of the contribution, and a detailed description (but not the value) of the property.

Stricter substantiation requirements apply in the case of charitable contributions with a value of $250 or more. These donations must be substantiated by a contemporaneous written acknowledgement of the contribution by the charity. The acknowledgement must include the amount of cash and a description (but not value) of any property other than cash contributed, whether the charity provided any goods or services in consideration for the contribution, and a good faith estimate of the value of any such goods or services.

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. In general, you are required to obtain a qualified appraisal for donated property (excluding publicly-traded securities) with a value of more than $5,000, and to attach an appraisal summary to the tax return.

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.

Please call us if you have any questions about these rules.

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The information contained in this communication is intended as general guidance on matters of interest only. The application and impact of laws can vary widely based on specific facts involved. Given the changing nature of laws, rules and regulations, and the inherent hazards of electronic communication, there may be delays, omissions, or inaccuracies in information contained in this transmission. The information contained herein should not be used as a substitute for consultation with professional accounting, tax, legal or other competent advisors. Pursuant to Regulations Governing Practice Before the Internal Revenue Service, any tax advice contained in this communication, unless explicitly provided otherwise, is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.