Charitable Contributions Documentation: What Qualifies and What Doesn’t

Janet Choquette, EA •

Happy New Year Everyone! Now that we have said goodbye to 2017 and have celebrated (hopefully not too much!) the New Year, many of us will make a list of New Year’s Resolutions. As a tax geek (yes, I admit it!) one of my resolutions is to pull all my tax documents together sooner than later so I can file my return timely! One of the most tasking jobs I find is pulling together the information I need to substantiate my charitable donations for the prior year. As discussed in our November blog post, contributions must be made to a “Qualified Organization”.

While going through your check register and making a list of both cash and non-cash donations made is helpful to compile the information, it does not fulfill the record-keeping requirement in the eyes of the IRS. The following is a list of acceptable documents:

• Bank statement, credit card statement or cancelled checks showing the date paid, the name of the charity and the amount of payment.
• A “written communication” from the donee showing the name of the donee organization, the date of the contribution, and the amount of the contribution. 
• For charitable contributions made by payroll deduction, a pay stub, Form W-2, or other employer-furnished document that sets forth the amount withheld for payment to a donee organization, along with a pledge card prepared by or at the direction of the donee organization, will be deemed to be a “written communication from the donee organization” that satisfies the requirements.
• In addition to the above, a donor claiming a deduction of $250 or more is also required to obtain and keep a “contemporaneous written acknowledgment” for a charitable contribution. To be contemporaneous the written acknowledgment must generally be obtained by the donor no later than the date the donor files the return for the year the contribution is made. The written acknowledgment must state whether the donee provides any goods or services in consideration for the contribution. If the donee provides goods or services to the donor in exchange for the contribution (a quid pro quo contribution), the written acknowledgment must include a good faith estimate of the value of the goods or services. The donee is not required to record or report this information to the IRS on behalf of a donor. The donor is responsible for requesting and obtaining the written acknowledgement from the donee. Although there is no prescribed format for the written acknowledgment, it must provide sufficient information to substantiate the amount of the contribution. 
• Household items and clothing contributed to charity must be in at least good used condition to be deductible. This requirement does not apply to contributions of food, paintings, antiques, other art objects, jewelry and gems, or collections, and does not apply to a contribution of an item for which a deduction of more than $500 is claimed if the taxpayer obtains a qualified appraisal of the item. 
• For claimed non cash contributions over $5,000, a qualified appraisal prepared by a qualified appraiser must be obtained.
• For donations of automobiles with a value of more than $500 you must also have a “contemporaneous written acknowledgment” from the organization or Form 1098-C. 

Knowing these rules ahead of time can help ensure you have proper documentation at the time of your contributions rather than having to find out while putting the information together for tax time that you don’t have sufficient records.
 
And just remember, when you buy that box of cookies, candy bar or popcorn from the kids outside of the grocery store or at the town dump, it’s more about the smiles on the kids’ faces and the enjoyment of eating those thin mints than it is about the donation value!! 
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