written by Kami Mason

Taxpayers must generally provide documentation to support a claim for any contributions made to charity that they are planning to deduct from their income. Assuming that the contribution was made to a qualified organization, that the taxpayer has received either no benefit from the contribution or a benefit that was less than the value of the contribution, and that the taxpayer otherwise met the requirements for a qualified contribution, then taxpayers should worry next whether they have the proper records to prove their claim.

Cash donations
The taxpayer must provide records to prove a donation of any amount of cash. Acceptable records for cash donations of less than $250 generally include:

  • An account statement or canceled check
  • A written letter, e-mail or other properly issued receipt from the qualified organization bearing the name of the organization and the date and amount of the contribution
  • A pay stub, Form W–2, or other payroll document showing the amount of a contribution made from payroll.

Cash donations of more than $250. If a taxpayer donated $250 or more in cash at any one time, the taxpayer must provide a written acknowledgment of the donation from the qualified organization. For each donation of $250 or more, the taxpayer must obtain a separate written acknowledgment. Furthermore, this written acknowledgement must:

  • State the date and amount of the contribution
  • State whether the qualified organization provided the taxpayer with any goods or services in exchange for the donation, and if so estimate their value
  • Be received by the taxpayer before the earlier of (1) the return’s filing date or (2) the due date of the return, plus any extensions.

Noncash contributions
As with cash contributions, the requirements for substantiating noncash contributions increase with the value of the contribution. For example, to substantiate noncash contributions of less than $250, taxpayers must show a receipt or other written communication from the charitable organizations.

To substantiate a noncash contribution between $250 and $500, the taxpayer must obtain a written acknowledgment of the contribution including the type and value of the goods. Noncash contributions totaling between $500 and $5,000 or donations of publically traded securities, a taxpayer must complete Section A of Form 8283, Noncash Charitable Contributions.

For noncash contributions of $5,000 or more the taxpayer must complete Section B of Form 8283. Generally, this would also require the taxpayer to obtain a qualified appraisal of the property’s fair market value. Last year the Treasury Inspector General for Tax Administration (TIGTA) issued a report finding that the IRS was not accurately monitoring the reporting of noncash contributions that required form 8283. The IRS responded that it agreed that it needed to initiate more correspondence audits with taxpayers claiming noncash contributions without the necessary Form 8283 and appraisal.

If you have any questions about this article, please contact us at 417-881-0145.