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Record Keeping Tips for Charitable Contributions

New tax law mandates strict record keeping

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You should keep all documents regarding donations to charity. This includes both cash and non-cash contributions. Under the Pension Protection Act, taxpayers are required have receipts from the charity, a canceled check, or credit card statement to prove their donation. No tax deduction will be allowed if the taxpayer cannot provide any supporting documentation. You will not need to mail in the receipts with their tax return. Instead, keep receipts and other documentation with your copy of the tax return in the event of an IRS audit.

What Records You Need to Keep

For cash contributions under $250, be sure to keep the following records:
  • Canceled check, bank statement, or credit card statement showing the amount paid, date paid, and the name of the charity to which you gave money;
  • Written receipts or acknowledgment letters from the charity showing the date and the amount of your contribution; and
  • Any other documentation or records that would establish the date and the amount you contributed.
For cash contributions of $250 or more, you must have a written acknowledgment from the charity before you can deduct the contribution on your tax return. Be sure to keep all acknowledgment letters from charities with your tax records. Acknowledgment letters must state the following:
  • Amount of cash you donated,
  • Whether the charity provided any goods or services in exchange for your donation, and
  • Description and good faith estimate of the value of goods or services that the charity provided to you.

Keeping Records of Non-Cash Contributions

For donations of property, you must keep records to establish what you donated, its condition, its fair market value, and the amount of your tax deduction. Your records must indicate:
  • Name and address of the charity,
  • Date and location of the contribution,
  • Description of the property donated,
  • Fair market value of the property and how you figured the value, and
  • Amount claimed as a tax deduction.

For non-cash contributions worth $250 to $500, you will also need a written acknowledgment letter from the charity to substantiate your deduction.

For non-cash contributions worth $500 to $5,000, you will need to keep records that establish:

  • How you acquired the property (such as purchase or inheritance)
  • Date you acquired the property
  • Your cost or adjusted basis in the property
For non-cash contributions of $5,000 or more, you will need a written appraisal from a qualified appraiser to substantiate the value of your deduction.

Donated items, such as cars, clothing, and household goods, must be in good condition. "The new law does not define 'good condition,'" according to a tax law briefing from CCH. No tax deduction is allowed for items in less than good condition. You should keep a detailed list of the non-cash goods you donated to charity, along with a description of their condition.

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