Feeling charitable? Be sure you can substantiate your gifts - (12/2/2024)
As the end of the year approaches, many people give more thought to supporting charities they favor. To avoid losing valuable charitable deductions if you itemize, you’ll need specific documentation, depending on the type and size of your gift. Here’s a breakdown of the rules.
Cash gifts under $250: A canceled check will do, or ask the charity for a receipt or “other reliable written record” that provides the organization’s name, the date and the amount of the gift. If you make separate gifts, there’s no need to combine gifts of less than $250 to the same charity (monthly contributions, for example).
Cash gifts of $250 or more: You’ll need a contemporaneous written acknowledgment from the charity stating the amount of the gift. That means you received the acknowledgment before the earlier of your tax return due date (including extensions) or the date you file your return. Also, if you received anything in exchange for your gift, such as a book or movie ticket, ask the charity about the fair market value of the item. You’ll need to subtract it from your charitable deduction.
Noncash gifts under $250: Get a receipt showing the charity’s name, the date and location of the donation, and a description of the property.
Noncash gifts of $250 or more: Obtain a contemporaneous written acknowledgment from the charity that contains the information required for cash gifts, plus a description of the property. File Form 8283 if total noncash gifts exceed $500.
Noncash gifts of more than $500: In addition to the above, keep records showing the date you acquired the property, how you acquired it and your adjusted basis in it.
Noncash gifts of more than $5,000 ($10,000 for closely held stock): In addition to the above, obtain a qualified appraisal and include an appraisal summary, signed by the appraiser and the charity, with your return. (No appraisal is required for publicly traded securities.)
Noncash gifts of more than $500,000 ($20,000 for art): In addition to the above, include a copy of the signed appraisal, not just a summary, with your return.
Saving taxes isn’t the primary motivator for charitable donations, but it may affect the amount you can afford to give. Substantiate your donations to ensure you receive the deductions you deserve.
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