By way of background, IRC Section 170 allows a deduction for charitable donations and the substantiation requirements for the donation depend on the amount and type of donation.
For cash donations the substantiation requirements are as follows:
- For cash donations under $250, the donor simply needs a copy of the cancelled check made payable to the charity.
- Cash donations over $250 require a statement from the charity confirming the amount of the donation and whether the donor received goods or services in return. If the donor received goods or services, the statement must include the value of the goods or services received and the donor’s deduction is limited to the amount of the donation less the value of the goods or services received. Importantly, the donor must have the statement from the charity before the tax return at issue is filed.
- For a donation of property valued at less than $250, a taxpayer must have records showing the name of the charity, the donation site, the date and value of the property donated, including the item’s condition.
- For a donation of property valued between $250 and $500, in addition to the information above, a taxpayer must have a written statement from the charity confirming the amount of the donation and whether the donor received goods or services in return. The donor must have the statement from the charity before the tax return is filed.
- For a donation of property valued above $500, a taxpayer must include an IRS Form 8283 with their tax return. In addition to the information discussed above, the Form 8283 will include the date the donor acquired the property and the cost basis. There are special rules for donations of cars, airplanes and boats worth more than $500.
- Donations of property with a value exceeding $5,000 require a complete Form 8283 and a qualified appraisal.
Lesson to learn? Dot the “i’s” and cross the “t’s” for any charitable donation.
For questions regarding this blog post or any other civil or criminal tax related matter, please feel free to contact Joel Crouch at (214) 749-2456 or email@example.com.