Tax Tip: Don't Lose Your Charitable Deduction for Lack of Paperwork - A message from tax attorney Paul Topolka, former District Counsel of the IRS for North-South Carolina

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Charitable contributions are only deductible if you itemize and have the proper substantiation.

For cash contributions of less than $250, you must have either a cancelled check/credit card receipt or a written statement from the charity that substantiates the donation.

For cash contributions of $250 or more, a cancelled check/credit card receipt is not enough.

You must obtain, by the time your return is filed (including extensions) in order to satisfy the contemporaneous requirement of the Section 170(f)(8), a written statement from the charity. It must:

  • Reflect the amount of the donation;
  • List any significant goods or services provided in exchange for the donation (other than intangible religious benefits); or,
  • Specifically state that “no goods or services were provided in exchange for this contribution.”

Obtaining the statement that “no goods or services were provided in exchange for this contribution” from the charity when you are audited will not satisfy the contemporaneous requirement.

Numerous taxpayers have learned this the hard way – losing their cases before the Tax Court on this very point. So please review your charitable deductions now and look for the magical statement that:

“No goods or services were provided in exchange for this contribution.”

 

Topics:  Charitable Donations, Income Taxes, IRS, Itemized Deductions, Tax Deductions

Published In: Tax Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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