Throughout the year, many taxpayers contribute money or gifts to qualified organizations eligible to receive tax-deductible charitable contributions. However, the rules related to charitable donations may be somewhat confusing for your clients. Here’s a primer from the IRS with suggestions on recordkeeping and acknowledgments for you to review and to pass along to your clients.
Taxpayers who plan to claim a charitable deduction on their tax return must do the following:
- Have a bank record or written communication from a charity for any monetary contributions.
- Get a written acknowledgment from the charity for any single donation of $250 or more.
Here are six facts for taxpayers to remember about these donations and written acknowledgments:
#1: Taxpayers who make single donations of $250 or more to a charity must have one of the following:
- A separate acknowledgment from the organization for each donation of $250 or more.
- One acknowledgment from the organization listing the amount and date of each contribution of $250 or more.
#2: The $250 threshold doesn’t mean a taxpayer adds up separate contributions of less than $250 throughout the year.
- For example, if someone gave a $25 offering to their church each week, they don’t need an acknowledgment from the church, even though their contributions for the year are more than $250.
#3: Contributions made by payroll deduction are treated as separate contributions for each pay period.
#4: If a taxpayer makes a payment that is partly for goods and services, their deductible contribution is the amount of the payment that is more than the value of those goods and services.
#5: A taxpayer must get the acknowledgment on, or before, the earlier of these two dates:
- The date they file their return for the year in which they make the contribution.
- The due date, including extensions, for filing the return.
#6: If the acknowledgment doesn’t show the date of the contribution, the taxpayers must also have a bank record or receipt that does show the date.
Here are some resources for more information:
- Can I Deduct My Charitable Contributions?
- Publication 526, Charitable Contributions
- Tax Topic 506, Charitable Contributions
- Publication 1771, Charitable Contributions Substantiation and Disclosure Requirements