Charitable Contributions and Substantiation

If you donate less than $250 by cash, check or credit card no formal acknowledgment by the charity is required. You must keep record of a cancelled check, credit card receipt or statement clearly showing the donee, the date and amount of the transaction. The $250 is determined on a “per donation” basis, so if you give $20 a week to the church all year, no formal acknowledgement is required other than the cancelled checks, etc. Donations made with a credit card are deductible when charged, not when the card is paid.

For cash contributions more than $250 you must keep a formal written acknowledgement from the donee. That statement must include the following:

  1. The amount and date of the contribution.
  2. Whether or not you received any goods or services.
  3.  The value of any goods or services if received, if any.
  4. That you received only intangible religious benefits and the goods or services described above in #2, if that is the case. 

This acknowledgement must be received before you file your tax return (including extensions) in order for the amount to be deductible. If you file before receipt of the letter, the donation is not deductible-call the charity before you file if you have not received the letter!

There are also limits on the cash contributions you may deduct, either 50% or 30% of your Adjusted Gross Income. Most charitable deductions are limited to 50% of your AGI, but if you give to a “fraternal organization” like the Elks or Eagles Club, the deduction is limited to 30%. Generally, if there is a social element to the organization, you will be limited to 30% of your AGI for the deduction. The excess may be carried forward and used for the next five years.

Documentation requirements for non-cash donations are a little bit different, and the substantiation requirements are more stringent. This will be discussed in a later blog, and as always, feel free to contact our office if you have questions.

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