Throughout the year, many taxpayers contribute money or gifts to qualified organizations eligible to receive tax-deductible charitable contributions. Taxpayers who plan to claim a charitable deduction on their tax return must do two things:
• Have a bank record or written communication from a charity for any monetary contributions.
• Get a written acknowledgment from the charity for any single donation of $250 or more.
Here are six things for taxpayers to remember about these donations and written acknowledgements:
1. Taxpayers who make single donations of $250 or more to a charity must have one of the following:
• A separate acknowledgment from the organization for each donation of $250 or more.
• One acknowledgment from the organization listing the amount and date of each contribution of $250 or more.
2. The $250 threshold doesn’t mean a taxpayer adds up separate contributions of less than $250 throughout the year.
• For example, if someone gave a $25 offering to their church each week, they don’t need an acknowledgement from the church, even though their contributions for the year are more than $250.
3. Contributions made by payroll deduction are treated as separate contributions for each pay period.
4. If a taxpayer makes a payment that is partly for goods and services, their deductible contribution is the amount of the payment that is more than the value of those goods and services.
5. A taxpayer must get the acknowledgement on or before the earlier of these two dates:
• The date they file their return for the year in which they make the contribution.
• The due date, including extensions, for filing the return.
6. If the acknowledgment doesn’t show the date of the contribution, the taxpayers must also have a bank record or receipt that does show the date.
If you have additional questions or would like to discuss the topic further, please contact your advisor.