Tax Tip of the Week- Cash Donations Substantiation Requirements

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Ahhh!! Tax Season is in full swings here at the office, so creativity is temporarily taking a back seat. So until we get past our deadline, we will still do our best to post our weekly blog but they will be taken from our tax resources. This one is from QuickFinder 1040 for 2010.

Donation reciept No deduction is allowed unless the taxpayer has either (1) bank records (for example, a cancelled check or account statement) or (2) written acknowledgment from the charity documenting the contribution's amount and date. [IRC §170(f)(17)]. This means that donors who give cash will need to get written acknowledgement for the charity to claim a deduction. Using a check for small donations, rather than cash , may be preferable.

Charitable contributions of $250 or more in any one day to any one organization must have written substantiation from the organization. A canceled check is not sufficient to support the deduction [IRC §170(f) (8)]. The acknowledgment letter must be received by the earlier of the date the tax return is filed for the contribution year or the extended due date for filing, including extensions. Payroll deduction contributions: Employees can substantiate a payroll deduction of $250 or more with (1) a Form W-2 or other document from the employer showing payroll deduction, and (2) a pledge card or other document prepared by the charity.