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 itemizable federal income tax deduction. Proof can be provided in the form of an official receipt or invoice from the receiving charitable organization, but can also be provided via credit card statements or other financial records detailing the donation.
- Proof of charitable contributions provides evidence to taxing authorities that a taxpayer did indeed make a charitable donation to a qualified organization.
- Because charitable contributions are often tax-deductible, taxpayers must furnish proof in the form of an official dated receipt from the receiving organization, or else some other official record of the transaction.
- In the U.S., the IRS requires proof for any contribution greater than $250 in cash or $500 in non-cash items. Non-cash items valued over $5,000 must also come with an expert appraisal.
Understanding Proof of Charitable Contributions
Proof of charitable contributions can differ depending on how much has been contributed. According to the IRS, acceptable forms of proof include bank statements, payroll deduction records and written statements from the recipient charity containing the charity’s name, contribution date and contribution amount. For contributions of $250 or more, the charity must also specify whether it provided the donor with any goods or services in exchange for the gift.
Taxpayers claiming a deduction for more than $500 in non-cash contributions must also fill out IRS Form 8283 and file it with their annual tax return. In addition, the IRS requires an independent substantiation of value, such as an appraisal, for non-cash donations exceeding $5,000. Taxpayers can consult IRS publication 561 to help determine the value of donated property.
Recent Tax Laws and Charitable Donations
The Tax Cuts and Jobs Act of 2017 nearly doubled standard deductions. For single filers, the standard deduction is $12,200 in 2019 and $12,400 in 2020. For married couples filing jointly, the standard deduction is $24,400 in 2019 and $24,800 in 2020. The standard deduction is the amount taxpayers can subtract from income if they don’t list itemized write-offs for mortgage interest, charitable donations and state taxes, among others, on Schedule A.
A filer’s itemized deductions now need to be greater than the new standard deductions for the filer to benefit from listing deductions separately. However, charitable donors still interested in receiving a tax break have options. One would be to bunch donations every few years to top the higher standard deduction and itemize their return, say, every other year.
Donor-advised funds could be an avenue for charitable donations as well. These funds allow donors to bunch 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.
Another option for donors targets those who are 70½ years and older. These filers can utilize their individual retirement accounts (IRA) to make charitable donations up to $100,000.