of the most popular tax deductions for individuals is
the one allowed for donations to charitable
organizations—from the local church or synagogue to the
Red Cross and various other national organizations.
Unfortunately, this deduction has also been among the
most abused. Thus, perhaps it is not surprising that
Congress has responded to the problem by regularly
enacting more rules around documenting donations.
we’re left with is a confusing array of rules that you
must comply with in order to claim a deduction. For
example, donors must obtain a written acknowledgment
from the charity if the value of the contribution (cash
or other property) is $250 or more—a canceled check is
not sufficient proof. A recent court case illustrates
how easy it is to run afoul of the documentation
the case, the taxpayers donated $22,517 to their church
during the tax year. Several individual donations were
made by check, each of which was in excess of $250.
Although the donations were made by check and the
taxpayer provided canceled checks to document the gift,
the IRS disallowed the deduction because the taxpayers
failed to obtain a timely receipt from their church to
support the donations. Such receipt (or receipts) must
be received by the time you file your return for the
year of the donation (or, if earlier, by when the return
is due). In addition, it must include all of the
The name and address of the charity--
The date of the contribution --
The amount of cash or a description (but not an
estimate of value) of any property contributed--
A list of any significant goods or services
received in return for the donation (other than
intangible religious benefits) or a specific
statement that the donor received no goods or
services from the charity.
the case at hand, the taxpayers had a receipt from their
church, but it did not contain the required statement
regarding whether goods or services were provided. They
tried to correct this omission by getting a new receipt
from their church after the IRS challenged the
deduction. By then, of course, it was too late.
While this gives you a glimpse at the substantiation
requirements for charitable donations, the rules can get
much more complicated, especially when you make
charitable donations of property rather than cash.
Please contact us to discuss the requirements for
specific types of donations or with questions on other
tax compliance or planning issues.