There are virtually countless charitable organizations to which you might donate. You
may choose to give cash or to contribute noncash items such as books, sporting goods,
or computers or other tech gear. In either case, once you do the good deed, you owe
it to yourself to properly claim a tax deduction.
No matter what you donate, you'll need documentation. And precisely what you'll need
depends on the type and value of your donation. Here are five things to know:
Cash contributions of less than $250 are the easiest to substantiate.
A canceled check or credit card statement is sufficient.
Alternatively, you can obtain a receipt from the recipient organization
showing its name, as well as the date, place and amount of the contribution.
Bear in mind that unsubstantiated contributions aren't deductible anymore. So
you must have a receipt or bank record.
Noncash donations of less than $250 require a bit more.
You'll need a receipt from the charity. Plus, you typically must estimate a
reasonable value for the donated item(s). Organizations that regularly accept
noncash donations typically will provide you a form for doing so. Keep in
mind that, for donations of clothing and household items to be deductible,
the items generally must be in at least good condition.
Bigger cash donations mean more paperwork. If you donate $250
or more in cash, a canceled check or credit card statement won't be
sufficient. You'll need a contemporaneous written acknowledgment from the
recipient organization that meets IRS guidelines.
Among other things, a contemporaneous written acknowledgment must be received
on or before the earlier of the date you file your return for the year in
which you made the donation or the due date (including an extension) for
filing the return. In addition, it must include a disclosure of whether the
charity provided anything in exchange. If it did, the organization must
provide a description and good-faith estimate of the exchanged item or
service. You can deduct only the difference between the amount donated and
the value of the item or service.
Noncash donations valued at $250 or more and up to $5,000 require
still more. You must get a contemporaneous written acknowledgment
plus written evidence that supports the item's acquisition date, cost and
fair market value. The written acknowledgment also must include a description
of the item.
Noncash donations valued at more than $5,000 are the most complicated.
Generally, both a contemporaneous written acknowledgment and a
qualified appraisal are required - unless the donation is publicly traded
securities. In some cases additional requirements might apply, so be sure to
contact us if you've made or are planning to make a substantial noncash
donation. We can verify the documentation of any type of donation, but
contributions of this size are particularly important to document properly.
This publication is distributed with the understanding that the author, publisher and
distributor are not rendering legal, accounting or other professional advice or
opinions on specific facts or matters, and, accordingly, assume no liability
whatsoever in connection with its use. The information contained in this newsletter
was not intended or written to be used and cannot be used for the purpose of (1)
avoiding tax-related penalties prescribed by the Internal Revenue Code or (2)
promoting or marketing any tax-related matter addressed herein. © 2016