Recordkeeping for Charitable Contributions

Posted on September 1, 2015 by Oozle Media

To deduct a charitable contribution, you need records to support the gift. What you need depends on the amount you are claiming and whether you gave cash or property. Cash gifts of any size require a bank record, written communication from the charity, or qualifying payroll deduction records. Contributions of $250 or more generally require additional documentation, while larger noncash gifts come with additional reporting and, in some cases, appraisal requirements.

Our tax team at Lightheart, Sanders and Associates helps individuals and business owners in Mississippi and South Carolina understand what documentation to keep before filing season, reducing the risk of losing an otherwise allowable deduction because something is missing.

What records do you need for a cash charitable contribution?

You cannot deduct a cash contribution of any amount unless you have documentation supporting the gift. That can include a bank record, written communication from the qualified organization, or qualifying payroll deduction records.

Cash contributions include payments made by cash, check, electronic funds transfer, online payment service, debit card, credit card, or payroll deduction. A bank record can include a canceled check, bank statement, or credit card statement showing the charity’s name, the date, and the amount of the contribution.

If you donate through payroll deduction, keep a pay stub, Form W-2, or another employer document showing the contribution, along with a pledge card or other document from the qualified organization containing the required information.

What extra documentation do you need for cash gifts of $250 or more?

For a single cash contribution of $250 or more, you generally need a contemporaneous written acknowledgment from the qualified organization. Certain payroll deduction records can satisfy the substantiation requirement for contributions made through payroll deduction.

The acknowledgment must state the amount you gave and whether the organization provided any goods or services in return. If it did, the acknowledgment generally must include a description and good faith estimate of their value.

• Timing: You must receive the acknowledgment on or before the earlier of the date you file your return or the return’s due date, including extensions.
• Multiple gifts: If you make more than one contribution of $250 or more, you can receive a separate acknowledgment for each or one acknowledgment that lists the qualifying contributions.
• Do not combine separate gifts: Separate cash contributions are not added together to reach the $250 threshold. For example, weekly contributions of $25 are generally treated as separate contributions.

What records do you need for a noncash contribution?

The documentation required for a property donation depends largely on the amount of the deduction you are claiming.

Deduction amount	What you generally need
Less than $250	A receipt from the qualified organization showing its name and address, the date and location of the contribution, and a sufficiently detailed description of the property. You should also keep reliable records supporting the property’s fair market value and how you determined it.
At least $250 but not more than $500	A contemporaneous written acknowledgment from the organization, along with the records required for smaller noncash gifts.
Over $500 but not more than $5,000	The acknowledgment and supporting records above, plus Form 8283, Section A. Additional information generally includes how and when you acquired the property, its fair market value and how you determined it, and its cost or other basis when required.
Over $5,000	Generally, a contemporaneous written acknowledgment, Form 8283, Section B, and a qualified written appraisal from a qualified appraiser. Exceptions apply to certain types of property.

For noncash contributions, similar items may need to be combined when determining whether the $500 and $5,000 thresholds apply. This can include similar property donated to more than one qualified organization during the same year.

These thresholds are generally based on the amount of the deduction you are claiming, not simply what you believe the donated property is worth.

What if you claim a deduction of more than $5,000 for donated property?

If you claim a deduction of more than $5,000 for a single property item or a group of similar items, you generally need a qualified written appraisal from a qualified appraiser, along with the required acknowledgment and Form 8283, Section B.

There are exceptions to the appraisal requirement for certain property, including some publicly traded securities, qualified vehicles, inventory, and other specified property. Because the rules can depend on what you donate, it is worth confirming the requirements before completing a larger noncash gift.

Qualified conservation contributions also have additional substantiation requirements, including records relating to the property’s fair market value and the conservation purpose of the contribution.

Can you deduct out-of-pocket expenses for volunteering?

You cannot deduct the value of your time or services when you volunteer, but some unreimbursed expenses you pay while providing services to a qualified organization may be deductible.

Generally, qualifying expenses must be:

• Unreimbursed
• Directly connected with the services you provide
• Expenses you incurred only because of those services
• Not personal, living, or family expenses

If your unreimbursed out-of-pocket expenses related to volunteer services, considered separately, are $250 or more, additional substantiation rules apply. You need adequate records supporting the amount and an acknowledgment from the organization describing the services you provided and stating whether you received any goods or services in return.

You must receive that acknowledgment on or before the earlier of the date you file your return or the due date of the return, including extensions.

Can you deduct mileage or car expenses for volunteering?

If you use your car while providing services to a qualified charitable organization, you may be able to deduct certain unreimbursed expenses directly related to that charitable use.

You can generally use the charitable standard mileage rate of 14 cents per mile rather than calculating actual expenses. If you use the mileage rate, keep records showing the miles driven for charitable purposes.

If you use actual expenses instead, you can generally deduct costs such as gas and oil that are directly related to the charitable use of the vehicle. General repair and maintenance expenses, depreciation, registration fees, tires, and insurance are not deductible as charitable car expenses.

Whichever method you use, contemporaneous records can make substantiating the deduction much easier. Keep track of the organization you were serving, the dates you used the car for charitable purposes, and either the charitable miles driven or the qualifying actual expenses.

Make charitable contribution recordkeeping easier

Good recordkeeping does not have to be complicated. Save the receipt or acknowledgment when you make the gift, keep charitable contribution documents together, and record volunteer mileage and expenses as they occur instead of trying to reconstruct everything at tax time.

Missing required documentation can cause an otherwise allowable charitable deduction to be disallowed. Building a simple system throughout the year can make filing easier and help ensure you have the records you need when it is time to prepare your return.

At Lightheart, Sanders and Associates, we help clients understand what documentation applies to their charitable giving so there are fewer surprises at filing time.

Next step: If you have questions about recordkeeping for a recent or upcoming donation, reach out to our tax planning services or contact us directly and we can help you determine what records to keep.

Frequently asked questions

Do I need a receipt for every cash donation?

You need documentation for every deductible cash contribution, regardless of the amount. This can be a qualifying bank record, written communication from the charity, or qualifying payroll deduction records.

What is a contemporaneous written acknowledgment?

It is a written acknowledgment from a qualified organization that provides the information required by the IRS and is received by the earlier of the date you file your return or the return’s due date, including extensions. For a cash contribution, it generally states the amount contributed and whether you received any goods or services in return.

Do I need an appraisal for a noncash donation?

Generally, a qualified written appraisal is required when you claim a deduction of more than $5,000 for a single item or group of similar items. Exceptions apply to certain types of property, so the appraisal requirement should be confirmed based on what you donated.

When do I need Form 8283?

If your total deduction for noncash contributions is more than $500, you generally need to file Form 8283 with your tax return. Section A generally applies to qualifying deductions of more than $500 but not more than $5,000, while Section B generally applies when the deduction for an item or group of similar items exceeds $5,000. Special rules and exceptions apply to certain property.

Can I deduct mileage for volunteering?

Yes, if the driving is directly related to providing services to a qualified organization and the other requirements are met. The charitable mileage rate is 14 cents per mile. Keep records showing the charitable miles you drove.

Comments are closed.