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What documentation do I need to deduct cash and non-cash charitable donations to my charity?

Bookkeeping and charitable donations go together. You cannot have one without the other!

Have you donated cash to a meaningful cause? Or, maybe you've gifted a real estate property? You'll want to review the following guidelines in order to properly classify your donations.

Don't get caught up in confusion! Today's blog focuses specifically on Cash & Non-Cash charitable donations.
Let's get started.


WHAT CHARITABLE DONATIONS ARE TAX DEDUCTIBLE?

  • Money donations to registered 501 (c)(3) organizations such religious, educational, and charitable groups
  • Note that not all nonprofits are 501 (c)(3) organizations
  • Acceptable forms: cash, check, debit, credit, payroll deduction, and auto withdrawal
  • Money donations to veterans' organizations and volunteer firefighter departments

**These two types or organizations are the only exceptions for 501 (c)(4) organizations (social welfare and civic organizations do not qualify)

WHY DO I NEED TO ITEMIZE MY CHARITABLE DONATIONS?

Your charitable donations may be tax deductible and therefore, proper documentation increases your chances of receiving the deduction. Donations fall into different categories and their classification will dictate if and how to properly itemize them.

This process is relatively easy, however come tax time, some individuals end up not submitting their charitable donations due to poor bookkeeping. Itemizing your charitable deductions is a necessary part to successful bookkeeping and because tax deductions are not guaranteed, itemization makes it more likely.

HOW DO I ITEMIZE MY CHARITABLE DONATIONS?
Itemization is key in this process. To get started, you will certain documentation on Form 1040: Schedule A, that proves your donation. 

The required documentation needed will depend on the amount made and type of donation made

For CASH DONATIONS < $250:
You will need one of the following documents containing the organizations name, date and amount of donation.
  • Receipt
  • Bank/Credit Card Statement
  • Canceled Checks

For CASH DONATIONS > $250:
You will need all the following information in a written statement from the organization:
  • Amount donated
  • Statement that discloses whether or not the organization gave your goods or services for donation
  • Description & value
DEADLINE: You must have this documentation by your tax filing date or extension date in the year you made the donation.

For NON-CASH DONATIONS < $500:
You will need a receipt from the organization with all of the following information:
  • Organization's Name & Address (thrift shops like goodwill and salvation army)
  • Date & Location of donation
  • Description of the donation
EXCEPTIONS can be made if it is unrealistic to obtain a receipt. You'll want to consult with us if this is the case.
DEADLINE: You must have this documentation by your tax filing date or extension date in the year you made the donation

For NON-CASH DONATIONS > $500 < $5,000:
  • You will need a written record and receipt with the following information:
  • Description of how you obtained the item you donated (did you buy it? Was it a gift? Or was it inherited?)
  • When you obtained the item you donated
  • Any costs that affected the property value
  • Complete Form 8283, Section A

For NON-CASH DONATIONS > $5,000

  • You will need a qualified appraisal of the property/item (Form 8283, Section )
  • You will need a written statement from the organization you made the donation to
  • You will also need the same information as above

WHAT ARE THE LIMITS ON MY CHARITABLE DEDUCTIONS?
The following limits on charitable deductions, as stated by the IRS, are as follows:
Donations to charitable organizations: up to 50% of adjusted gross income
Donations to private foundations, etc.: up to 30% of AGI

ALWAYS ASK FOR A RECEIPT!
Do not miss the opportunity to be eligible for a tax deduction from your charitable donations! 

We recommend that you always ask for a receipt and/or invoice for your donations, regardless of whether you think you will need them or not. This sets you up for better bookkeeping and avoids having to request proper documentation during tax season when you really need them!

-Chris Boyer, EA




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