ReAnn Rothwell’s Money Saving Ideas, Tax & Organizing Tips

Please remember that the record keeping rules for deducting charitable giving changed for 2007.

You may not claim a deduction for any contribution of cash, a check or other monetary gift unless you maintain a record of the contribution in the form of either a bank record (such as an actual cancelled check or credit card statement) *or* a written communication from the charity (such as a receipt or a letter) showing:

1. the name of the charity,
2. the date of the contribution, and
3. The amount of the contribution.

Simple written records prepared by you (such as check registers or personal notations) are no longer sufficient to support charitable contributions.

If you claim charitable contributions made by payroll deduction you can satisfy the recordkeeping requirement with (1) a pay stub, W-2, or other document furnished by the employer that states the amount withheld for payment to charity, *and* (2) a pledge card other document prepared by or at the direction of the charity that shows the name the charity 

If you are claiming a deduction of $250 or more, you are also required to obtain and keep a written acknowledgment from the charity for a charitable contribution.

The written acknowledgment must state whether the charity provided any goods or services in consideration for the contribution. If the charity provided goods or services to you in exchange for the contribution, the written acknowledgment must include a good faith estimate of the value of the goods or services.

Noncash Contributions

For a contribution not made in cash, the records you must keep depend on whether your deduction for the contribution is:

1. Less than $250,
2. At least $250 but not more than $500,
3. Over $500 but not more than $5,000, or
4. Over $5,000.

In figuring whether your deduction is $500 or more, combine your net claimed deductions for all similar items of property donated to any charitable organization during the year.

Deductions of Less Than $250

If you make any noncash contribution, you must get and keep a receipt from the charitable organization showing:

1. The name of the charitable organization,
2. The date and location of the charitable contribution, and
3. A reasonably detailed description of the property.

A letter or other written communication from the charitable organization acknowledging receipt of the contribution and containing the information in (1), (2), and (3) will serve as a receipt.

You are not required to have a receipt where it is impractical to get one (for example, if you leave property at a charity’s unattended drop site). In that case, you should have the above information written down yourself and an explanation of why it was not possible to get a receipt from the organization. However, I would recommend that you always get a receipt from the charity itself in case of an audit!

You must also keep reliable written records for *each* item of donated property. Your written records must include the following information.

1. The name and address of the organization to which you contributed.
2. The date and location of the contribution.
3. A description of the property in detail reasonable under the circumstances.
4. The fair market value of the property at the time of the contribution and how you figured the fair market value.
5. The cost or other basis of the property if you must reduce its fair market value by appreciation. Your records should also include the amount of the reduction and how you figured it.
6. The amount you claim as a deduction for the tax year as a result of the contribution, if you contribute less than your entire interest in the property during the tax year.
7. The terms of any conditions attached to the gift of property.

Deductions of At Least $250 but Not More Than $500

If you claim a deduction of at least $250 but not more than $500 for a noncash charitable contribution, you must get and keep an acknowledgment of your contribution from the qualified organization. If you made more than one contribution of $250 or more, you must have either a separate acknowledgment for each or one acknowledgment that shows your total contributions.

The acknowledgment must contain all of the information for Deductions of less than $250 above PLUS the acknowledgment must also meet these tests:

1. It must be written.
2. It must include:
   1. A description (but not necessarily the value) of any property you contributed,
   2. Whether the qualified organization gave you any goods or services as a result of your contribution and
   3. A description and good faith estimate of the value of any goods or services described in (b).
3. You must get it on or before the earlier of:
   1. The date you file your return for the year you make the contribution, or
   2. The due date, including extensions, for filing the return.

Deductions over $500 but Not Over $5,000

If you claim a deduction over $500 but not over $5,000 for a noncash charitable contribution, you must have everything described under Deductions of At Least $250 But Not More Than $500. Your records must also include:

• 1. How you got the property, for example, by purchase, gift, bequest, inheritance, or exchange.
• 2. The approximate date you got the property.
• 3. The cost or other basis, and any adjustments to the basis, of property held less than 12 months and, if available, the cost or other basis of property held 12 months or more.

If you are not able to provide information on either the date you got the property or the cost basis of the property, and you have a reasonable cause for not being able to provide this information, attach a statement of explanation to your return.

Deductions over $5,000

If you claim a deduction of over $5,000 for a charitable contribution of one property item or a group of similar property items, you must have the acknowledgment and the written records described under Deductions over $500 but Not Over $5,000. Generally, you must also obtain a qualified written appraisal of the donated property from a qualified appraiser.

For more information on Charitable deductions please see:

IRS Publication 526  - Charitable Contributions

IRS Publication 561 - Determining the Value of Donated Property

IRS Publication 78 - Cumulative List of Organizations