CHARITABLE CONTRIBUTIONS – REPORTING, RECORDKEEPING AND SUBSTANTIATION

Stricter recordkeeping and substantiation requirements apply beginning in 2007 as follows:

CASH CONTRIBUTIONS UNDER $250 — paid by cash, check , electronic funds transfer (EFT), credit card or payroll deduction, are deductible as an itemized deduction only if you keep at least one of the following:

  1. A bank record (i.e., canceled check, bank statement or credit card statement) that shows the NAME of the qualified organization, the DATE of the contribution, and the AMOUNT of the contribution, or
  1. A receipt, a letter or other written communication from the qualified organization that shows the NAME of the qualified organization, the DATE of the contribution, and the AMOUNT of the contribution, or
  1. For Contributions By Payroll Deductions, keep your payroll deduction records such as a pay stub, Form W-2 or other document from your employer that shows the DATE and the AMOUNT of the contributions AND a pledge card or other document prepared by the qualified organization showing its NAME.

CASH CONTRIBUTIONS OF $250 OR MORE — these are deductible as an itemized deduction only if you have a written acknowledgement from the qualified organization that includes, in part: 1) the amount you contributed, 2) whether you were provided any goods or services because of your contribution, and 3) a description and good faith estimate of the value of goods or services received (other than intangible religious benefits).  You also must obtain the written acknowledgement by the date you file your return, or by the due date of your return (including extensions), whichever is earlier.

Note:  No records are necessary if the written acknowledgement contains all of the above required information.  If the written acknowledgement does not show the date of the contribution, you must have a bank record or receipt that shows the contribution date.

CONTRIBUTIONS OF CLOTHING AND HOUSEHOLD ITEMS:  An itemized deduction for donations of clothing and household items (e.g., furniture, furnishings, electronics, appliances and other similar items) is now allowed ONLY IF the donated property is in “good used condition or better”.  The IRS can deny a deduction if such donated property has minimal monetary value.  For purposes of these limitation rules, food, paintings, antiques, other art objects, jewelry, gems and collections are not “household items”.  However, you may claim a deduction for more than $500 for a contribution of a single item of clothing or a household item, even if the item is not in good used condition, if you obtain a qualified appraisal for the donated item, and the appraisal is attached to your return.

The foregoing discussion was designed to give you information on the most common types of charitable donations.  However, numerous other substantiation requirements apply for other types and amounts of non-cash contributions.

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