David Knoble, CPA, PLLC

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Make Sure Your Charitable Contributions are Deductible

We all have char­i­ties that we con­tribute to.  How­ever, did you know that with­out proper doc­u­men­ta­tion, the IRS can dis­al­low your con­tri­bu­tion even from a rec­og­nized char­ity?  There are a few guide­lines to be sure get fol­lowed when mak­ing con­tri­bu­tions.  If you find a char­ity you sup­port does not fol­low these guide­lines, then let them know what changes they should make.  Below are the most fre­quently missed requirements.

Reg §1.170A-13 sec­tion (f) indi­cates all cash con­tri­bu­tions in excess of $250 must be doc­u­mented in a cer­tain way.  If more than $250 is given to one char­ity, but made by pay­ments each less than $250, then this require­ment does not need to be followed.

First, make sure the char­ity gives each donor a receipt.  Receipts are more impor­tant that can­celled checks, although can­celled checks help sup­port your deduc­tion and should not be discarded.

Sec­ond, the receipt should con­tain the name and tax iden­ti­fi­ca­tion of the char­ity.  Ide­ally this would be a receipt printed on let­ter­head.  In fact, some cases have been reported where char­ity deduc­tions were ques­tioned because they were printed on quick­books type state­ments that could have been repro­d­u­ca­ble by anyone.

Third, make sure the recipt indi­cates clearly that the con­trib­u­tor “received no goods or ser­vices.”  This is impor­tant to indi­cate that the entire amount was for a char­i­ta­ble contribution.

Finally, make sure that if mul­ti­ple con­tri­bu­tions were made to the same char­ity, that all pay­ments are listed on the receipt.  If a receipt is issued for each pay­ment, that will sat­isfy the require­ments.  How­ever, if only one annual receipt per year is issued, be sure all pay­ments and dates are listed.   If one lump sum is listed the IRS is sub­ject to dis­al­low­ing the con­tri­bu­tion as deductible.

In order for the con­tri­bu­tion to be deductible in the cur­rent year, Reg §1.170A-13(f)(3) requires that the notice be dated and deliv­ered in a cer­tain time­frame.  The date must be the ear­lier of  the date the tax return is actu­ally filed or the due date, includ­ing exten­sions.  Note that these dates are for fil­ing the orig­i­nal return, not exten­sions.  If a notice is dated after that date, the deduc­tion is disallowed.

Char­i­ta­ble con­tri­bu­tion deduc­tions are not as easy as giv­ing money.  How­ever, setup prop­erly, char­i­ties can issue proper receipts eas­ily so that the deduc­tions are preserved.

© 2009, david.knoble
by David Kno­ble, CPA, PLLC
Serv­ing Non-Profits, Busi­nesses & Indi­vid­u­als
Rock Hill, SC

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