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Charitable Giving - Document, Document, Document
written by: Ritva Williamson
As the Holiday Season approaches we tend to become more generous and soft-hearted. A widely-held perception is that corporations and foundations are the biggest sources to tap for grants and donations. The reality is that 80 percent of philanthropic dollars are contributed by individuals and bequests. Charitable giving grew 4.9% in 2013, the largest gain since the 2008 recession.
The IRS wants you to substantiate your generosity. What do they want to know for you to get your deduction? They need to know how much you gave, what did you give, when did you give it, and who received it. The recordkeeping and filing requirements for charitable contribution deductions vary based on whether the contribution is made in cash or property and the amount of cash or property contributed.
The main rule is that a donor will not be allowed any deduction for a contribution of cash, by check, or any other monetary gift regardless of the amount unless the donor retains either (1) a bank record that supports the donation or (2) a written receipt or communication from the charity showing the name of the donee organization, date, and amount of contribution.
Property Contributions of Less Than $250. - Property donations valued at less than $250 must be substantiated by (1) a written receipt or letter from the charitable organization and must have a detailed description of the property; or (2) if it is impractical to obtain a receipt, reliable written record should be obtained.
Cash and Property Contributions of $250 or More - Donors must get a written acknowledgement from the charity. A cancelled check or other reliable records are not sufficient proof.
Property Contributions of More Than $500 - When a taxpayer donates property valued at more than $500, Form 8283 must be attached to the tax return. The taxpayer reports on Form 8283 how and when the property was acquired, and its cost or basis.
Property Contributions of More Than $5,000 - A donor who contributes property, other than publicly traded securities, valued at more than $5,000 during the tax year must obtain a qualified written appraisal and attach it to the return. The appraisal must be done by a qualified appraiser in accordance with generally accepted appraisal standards. The code gives several definitions and guidelines who is and who would not be a qualified appraiser. The donor, donee, and certain related persons are not considered qualified appraisers even if they meet the other required criteria.
Also, be aware of the scams and organizations that are not qualified charitable organizations or have lost their tax-exempt status. If in doubt, visit the IRS website, irs.gov and click on the Charities & Non-Profits tab. The IRS publishes a list of Automatic Revocation of Exemption. Donations to these charities are not tax deductible.
Our tax team will be happy to discuss charitable giving and answer your questions. Please give us a call, we are here to help you. 513-868-8600