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Charity: no proof, no deduction

March 24, 2009

Since the beginning of days -- or at least since the charitable contribution was invented -- taxpayers have seen it as a mulligan. "Oh, I know I dropped at least $10 a week in the collection plate, and all of my change in the Salvation Army bucket. That has to add up to $400!"

No more. The tax law now requires you to prove every contribution. For cash gifts up to $249.99, a cancelled check or a receipt will do. If the gift is $250 or more, the IRS requires a letter telling:

- 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.

No documentation, no deduction. So before you do your return, or go to your preparer, make sure you have your receipts, cancelled checks or letters from the charity. "Same as last year" is not a valid charitable deduction.

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Link: IRS page on Substantiating Charitable Contributions

Tags: Tips for filing 2008 returns.