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CASH CONTRIBUTIONS: MAKE SURE YOU HAVE THE PAPERWORK

April 01, 2007

As you put your information together to prepare your 2006 Form 1040, make sure your charitable donees have held up their end of the process. For charitable donations of $250 or more, you get no deduction unless you have a receipt from the charity that tells you:

- the amount of cash and a description (but not the value) of any property other than cash contributed;

- whether the donee provided any goods or services in consideration for the contribution;

- a description and good-faith estimate of the value of those goods or services; and

- if the goods or services consist entirely of intangible religious benefits (e.g., admission to a religious ceremony, but not religious school tuition or fees), a statement to that effect.

You don't turn this statement in with your return, but you are required to have it if you claim the deduction. No documentation, no deduction, and probably you will get a penalty of 20% of any tax resulting from not having the documentation. That means if your charity hasn't gotten you this statement, it's time to ask them for it.

Remember, the requirements get more stringent starting in 2007. If you are, say, in the habit of putting $5 in the collection basket at church anonymously, you will no longer be able to deduct it. You will need either a cancelled check or a receipt from the charity to support your deduction.

Check IRS Publication 1771 for more information.

This is another installment in our series of 2007 filing season tips. Look for a new one each day through April 17.

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