If you plan to claim a federal income tax deduction for qualifying charitable contributions, it’s important to keep good records of your gifts. Basically, your records should include the following information:
- charity to whom the gift was made
- the amount of cash or the type and value of other property you donated to the charity
- whether anything was received in consideration for the gift (e.g. dinner served at a charity gala)
Other types of documentation may also be required in order to receive a tax deduction for your gift. The records needed generally depend on the type and value of the property you donate. While you most likely won’t need to attach the records to your income tax return, you should keep the records with your tax files so that you can provide them to the IRS if requested to do so.
In order to claim a charitable deduction for any contribution of cash, a check, or other monetary gift, you must keep a bank record (such as a cancelled check or an account statement from your financial institution) or a written communication (such as a receipt or letter) from the charity showing the name of the charity, the date of the contribution, and the amount of the contribution. If you make charitable contributions through payroll deductions, you may substantiate the charitable deduction using the charity’s pledge card along with either a pay stub, a Form W-2, or some other employer-furnished document showing the amount withheld and paid to charity. If you make a single contribution of $250 or more by payroll deduction, the pledge card or a document from the charity must state that no goods or services were provided in return for the payroll deduction.
Contributions of $250 or more
If you claim a charitable deduction for any contribution of $250 or more, you must additionally have a written acknowledgment of the contribution from the charity. The acknowledgment should contain the following information:
- the name of the charity
- the amount of any cash contribution
- a detailed description of any non-cash contribution
The acknowledgment must also include either a statement that no goods and services were provided by the charity in return for the contribution, or a good-faith estimate of the value of such goods and services (these reduce the amount of the charitable deduction). In some cases the goods and services received in exchange for a gift may be token benefits or consisted entirely of insubstantial membership benefits or intangible religious benefits – this information should be included in the acknowledgment of the gift. You should have the written acknowledgment before you file the tax return for the year in which you are claiming the deduction.
If you donate property, you must generally get a receipt from the charitable organization with the name of the charitable organization, the date and location of the contribution, and a reasonably detailed description of the property. You should keep this record along with the fair market value of the property (and how it was determined), the adjusted basis of the property, the amount claimed as a deduction, and the terms of any conditions attached to contribution of the property.
If the value of the contribution is $250 or more, you must also substantiate the contribution with a contemporaneous written acknowledgment of the contribution from the charity as described previously. If the value of the contribution is over $500, your records must also include how you got the property (e.g., purchase, gift, inheritance, or exchange), when you got the property, and the cost or other basis of the property (including any adjustments). If you claim a deduction of over $5,000 for a donated item or a group of similar items, you must also obtain a qualified written appraisal of the donated property from a qualified appraiser.
Lumina Financial Consultants, LLC and its representatives do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.