Charitable Deduction Reminder

Posted by lgtcpa on Mar 31, 2015

Donors must substantiate charitable contributions by keeping record of all donations. While all contributions must be substantiated, contributions of $250 or more require a written receipt from the charity.

Stricter substantiation requirements apply in the case of charitable contributions with a value of $250 or more. No charitable deduction is allowed for any contribution of $250 or more unless you substantiate the contribution by a contemporaneous written acknowledgement of the contribution by the donee organization. You must have the receipt in hand by the time you file your return (or by the due date, if earlier) or you will not be able to claim the deduction.

The acknowledgement must include the amount of cash and a description (but not value) of any property other than cash contributed, whether the donee provided any goods or services in consideration for the contribution, and; if so, a good faith estimate of the value of any such goods or services. If the receipt from the donee organization does not contain the statement that no goods or services were received by you in consideration for the contribution, please contact them and request that they add such a statement. The IRS has the authority to disallow your charitable contribution deduction if the statement is not on their receipt.

If you make separate contributions of less than $250, you won’t be subject to the requirement to get a written receipt, even if the sum of the contributions to the same charity totals $250 or more in a year. Also, if you have contributions withheld from your wages, the deduction from each payment of wages is treated as a separate contribution for purposes of the $250 threshold.

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, which tells you the value of those goods or services. Be sure to retain these statements.

For a contribution of property other than money, you generally must maintain a receipt from the donee organization showing its name, the date and location of the contribution, and a detailed description (but not the value) of the property. However, 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 total charitable deduction you claim for non-cash property (for any item or group of similar items) is more than $5,000, you are required to obtain a qualified appraisal for donated property and to attach an appraisal summary to the tax return. A qualified appraisal is not required for publicly-traded securities for which market quotations are readily available. A partially completed appraisal summary and the maintenance of certain records are required for:

  1. Nonpublicly-traded stock for which the claimed deduction is greater than $5,000 and no more than $10,000, and
  2. Certain publicly-traded securities for which market quotations are not readily available. A qualified appraisal is required for gifts of art valued at $20,000 or more. IRS may also request that you provide a photograph. If an item has been appraised at $50,000 or more, you may request the IRS to issue a “Statement of Value,” which may be used to substantiate the value.

Seek the services of a legal or tax adviser before implementing any ideas contained in this blog. To reach a financial advisor at Lane Gorman Trubitt PLLC, call (214) 871.7500 or email askus@lgt-cpa.com.

Topics: Not-for-Profit, Tax