Charitable Contributions Law

Cash and Checks

 

• Cash contributions, regardless of amount, must be substantiated with a receipt from the charitable organization in order for the contribution to be deductible, effective January 1, 2007.

 

For example, cash given to the Salvation Army at your local post office, or cash dropped into the offering plate at your church, will NOT be deductible unless you receive a donation receipt from the organization or have a bank record substantiating the donation. This also includes out-of-pocket expenses paid in support of charitable organization activities.

 

• Checks written to a charitable organization that are $249 or less are deductible with substantiation from the canceled check.

 

• Checks written to a charitable organization that are $250 or more are only deductible with a receipt from the charitable organization. A year-end giving statement would qualify as a receipt as long as the year-end statement itemizes your individual donations and does not contain only a total. Your canceled check(s) are not considered substantiation by the Internal Revenue Service and your deduction will be denied without the organization’s receipt.

 

• You must have the receipt from your charitable organization by the time you file your tax return. The IRS has denied charitable deductions for individuals when it was proven that the individual obtained the receipt after they filed their tax returns.

 

Non-cash items

 

• Non-cash contributions valued at $500 or less do not require any details of the donation to be reported on your tax return. You will need substantiation and details of the donation should the Internal Revenue Service audit your donation.

 

• Non-cash contributions valued at more than $500 requires the following information to be reported on your tax return in order to deduct the donation:

 

o Name and address of the charitable organization
o Description of item(s) donated
o Date of each donation
o Fair market value of item(s) donated
o Your cost (basis) of the item(s) donated

 

For non-cash contributions made after August 17, 2006, only items that are in good used condition or better will be permitted.

 

A qualified appraisal is also required for any donation valued at $5,000 or more.

 

Donation of motor vehicles, boats and airplanes

 

The charitable deduction for the donation of a motor vehicle, boat or airplane, is generally limited to the amount of money the charitable organization gets upon sale of your motor vehicle, boat or airplane. However, there are exceptions to this rule if the charitable organization does not sell your motor vehicle, boat or airplane. In order to claim a deduction on your tax return, you must obtain form 1098-C from the charitable organization if your donation exceeds $500.

 

A qualified appraisal is also required for any donation valued at $5,000 or more.

 

The rules above cover the basic requirements for charitable contributions.
For a complete discussion of charitable contributions, see IRS publication 526.