Proof of Charitable Contributions

What Is Proof of Charitable Contributions?

Proof of charitable contributions refers to the substantiation required by the Internal Revenue Service (IRS) for a taxpayer to claim a donation of money, property, or financial assets as an itemized deduction on their federal tax return. Proof can be provided in the form of an official receipt or invoice from the receiving qualified charitable organization, but it can also be provided via credit card statements or other financial records detailing the donation.

The following qualify as itemized deductions: charitable donations, state and local income or sales taxes, real estate taxes, personal property taxes, mortgage interest, disaster losses, and medical and dental expenses.

Key Takeaways

  • Proof of charitable contributions provides evidence to taxing authorities that a taxpayer did indeed make a charitable donation to a qualified organization.
  • Taxpayers are responsible to maintain a record of contributions regardless of whether cash, check, or other forms of monetary gifts were given.
  • Because charitable contributions are often tax deductible, taxpayers must furnish proof in the form of an official dated receipt from the receiving organization or some other official record of the transaction.
  • In the U.S. the IRS requires proof for any contribution of $250 or more in cash or $500 or more in non-cash items. Non-cash items valued at over $5,000 must also come with an expert appraisal.
  • Taxpayers must fill out Form 8283 (Noncash Charitable Contributions) for each non-cash contribution greater than $500 and attach required appraisals to the form.

When Do I Need Proof of Charitable Contributions?

Qualified charitable deductions offer a good way to reduce your tax bill. The specifics of when and what proof of said donations is required by the IRS varies depending on how much and what is donated. Both cash and non-cash contributions are allowed and have different rules. Below are the details.

Cash Donations Under $250

For cash contributions less than $250, the IRS requires a bank record or written receipt from the charitable organization containing the name of the organization and the date and amount of the contribution. A bank record can be any one of the following:

  • A canceled check
  • A bank or credit union statement
  • A credit card statement
  • An electronic fund transfer receipt
  • A scanned image of both sides of a canceled check obtained from a bank or credit union website

Also, if you give an organization a payment of more than $75 that is partly a donation and partly a payment for goods and services, it must provide you with a written statement acknowledging it.

Cash Donations of $250 or More

For cash contributions of $250 or more, the IRS insists on “a contemporaneous written acknowledgment of your contribution from the qualified organization or certain payroll deduction records.” It also must specify whether it provided the donor with any goods or services in exchange for the gift.

For the proof to be considered contemporaneous, you must receive it on or before the earlier of:

  • The date you file your return for the year you make the contribution
  • The due date, including extensions, for filing the return

Non-Cash Donations of Less Than $250

For non-cash donations of less than $250, you generally need a receipt from the charitable organization that includes all of the following:

  1. The name and address of the qualified organization to which you contributed
  2. The date and location of the charitable contribution
  3. A description of the property in sufficient detail under the circumstances (taking into account the value of the property) for a person not generally familiar with the type of property to understand that the description is of the contributed property
  4. For a security, the name of the issuer, the type of security, and whether it is publicly traded as of the date of the contribution

If it is not possible to get such a receipt, the IRS will accept your own written records if they include:

  • The information in (1), (2), (3), and (4) above
  • For clothing or a household item a description of its condition
  • The fair market value of the property at the time of the contribution and how you figured it

Taxpayers can consult IRS Publication 561 to help determine the value of the donated property.

Non-Cash Donations of $250 but Less Than $500

For non-cash donations of at least $250 but less than $500, you need a contemporaneous written acknowledgement from the organization for each donation that includes all of the following:

  • A description (but not necessarily the value) of any property you contributed
  • Whether the qualified organization gave you any goods or services as a result of your contribution (other than certain token items and membership benefits)
  • A description and good faith estimate of the value of any goods or services you received

Non-Cash Donations of $500 to $5,000

You must have the contemporaneous written acknowledgement described above and also fill out IRS Form 8283. The information required on the form includes all of the following:

  • Your name and taxpayer identification number (TIN), which is usually your Social Security number
  • The name and address of the qualified organization
  • The date of the charitable contribution
  • A description of the property in sufficient detail under the circumstances (taking into account the value of the property) for a person not generally familiar with the type of property to understand that the description is of the contributed property
  • The fair market value of the property on the contribution date and the method used in figuring the fair market value
  • In the case of real or tangible property, its condition
  • In the case of tangible personal property, whether the donee has certified it for a use related to the purpose or function constituting the donee’s basis for exemption under Section 501 of the Internal Revenue Code or, in the case of a governmental unit, an exclusively public purpose
  • In the case of securities, the name of the issuer, the type of securities, and whether they were publicly traded as of the date of the contribution
  • How you got the property, for example, by purchase, gift, bequest, inheritance, or exchange
  • The approximate date you got the property or, if created, produced, or manufactured by or for you, the approximate date the property was substantially completed
  • The cost basis (or other basis), and any adjustments to the basis, of property held less than 12 months and, if available, the cost or other basis of property held 12 months or more (does not apply to publicly traded securities)

Non-Cash Donations of More Than $5,000

In addition to satisfying all of the requirements for non-cash donations of $500 to $5,000, non-cash donations of items valued at more than $5,000 must also come with an expert appraisal of the item. If you claim a deduction of more than $500,000, you must attach a copy of that appraisal to your Form 8283.

More than $5,000

The amount of a non-cash contribution that requires an expert appraisal of the item donated.

Example of Proof of Charitable Contributions

Vic, a transgender activist, decides that they want to give $1,500 in cash to Treatment Action Group (TAG), a small international nonprofit headquartered in New York City that describes itself as “an independent, activist, and community-based research and policy think tank committed to racial, gender, and LGBTQ+ equity; social justice; and liberation, fighting to end HIV, tuberculosis (TB), and hepatitis C virus (HCV).” Vic decides to do so via TAG’s online giving portal, which can be accessed via a link on the TAG website.

To make the donation this way requires a charge card, which Vic has and uses. This automatically generates an email acknowledgement from TAG to Vic. Shortly thereafter, Vic also receives an acknowledgement letter via snail mail from TAG thanking them for the donation and personally signed by TAG Executive Director Mark Harrington. This is standard procedure for TAG, which believes in supporter outreach, according to TAG Administrator Joseph McConnell.

Ultimately, Vic will have three proofs of charitable contribution: the charge card transaction record, the email from TAG, and the physical letter sent by TAG. However, only the last two satisfy the IRS definition of “contemporaneous,” which the size of the donation dictates as necessary. If Vic’s donation had been under $250, then all three proofs would be valid.

Tax Laws and Charitable Donations

The Tax Cuts and Jobs Act (TCJA) of 2017 made many changes to allowable tax deductions while nearly doubling the standard deduction, which is the amount taxpayers can subtract from income if they don’t list itemized deductions on Schedule A. The standard deduction for single filers is $12,950 in 2022 and $13,850 in 2023, while for married couples filing jointly it is $25,900 in 2022 and $27,700 in 2023.

A taxpayer’s deductions now need to be significantly higher than before the TCJA went into effect to benefit from itemizing them, and as a result, a majority of taxpayers have historically taken the standard deduction. However, charitable donors still interested in itemizing have options. One would be to bunch donations across several years, allowing the total to then top the higher standard deduction in a single year, which would mean only itemizing their return, say, every two, three, or four years.

Donor-advised funds could also be an avenue for itemizing charitable donations. These funds allow donors to bundle smaller gifts into one large amount and take a deduction in the year of the gift. The donor then has the ability to designate charities as recipients at a later date. In the meantime, the assets can be invested and grow tax-free. It’s worth noting that donor-advised accounts have fees. 

A third itemizing option for donors targets those who are 70½ years and older. These filers can utilize their individual retirement accounts (IRAs) to make charitable donations of up to $100,000.

How Much in Donations Can Be Claimed Without Receipts?

The IRS permits cash or property donations up to $250 without a written letter or acknowledgment from the charity. Donations over this amount must often include the amount donated, what value was received in return from the charity, and an estimated value for non-cash transactions.

What Can I Donate to Charity?

Allowable donations include cash, property, and other financial assets such as stocks. A major consideration for donating different assets to a charity is the charity's ability to receive the good. For example, charities must have a brokerage account issued in the entity's name to process digital transfers of stock ownership. Alternatively, charities may turn away physical, tangible donations if they do not have adequate space for the item(s).

Will a Bank Record Suffice as Proof of Charitable Contributions?

A bank record counts as proof only in the case of a cash donation under $250. For larger cash donations and all non-cash donations, additional proof is necessary, starting with a written acknowledgement from the charity that received the donation. The larger the donation, the more detailed the needed proof.

The Bottom Line

Whether for charitable reasons or tax-avoidance reasons, taxpayers frequently utilize the charitable contributions deduction when itemizing their returns to reduce their tax liability. However, this deduction is subject to IRS policies and may be subject to audit. To ensure the deduction is taken correctly, ensure adequate documentation has been maintained of dollar amounts and dates, external valuations have been secured where appropriate, and understand the tax reporting differences between cash and non-cash donations.

Article Sources
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