Charitable deduction record keeping: 2/365
Another day, another tax tip.
A smart way to stretch your budget is by claiming the income tax charitable deduction for gifts you’ve made. However, certain requirements must be met or the deduction might be disallowed.
One such requirement is the contribution be made to a qualified organization, as defined in the Internal Revenue Code. The IRS helpfully maintains a searchable database of charitable organizations on its website.
Another requirement: you must be able to substantiate your contribution. The substantiation required depends on the amount of the contribution.
Here’s a very simple, beginning explanation of IRS record keeping rules for the charitable deduction:
Gifts of less than $250 per donee — you need a cancelled check or receipt
$250 or more per donee — you need a timely written acknowledgement from the donee
Total deductions for all property exceeds $500 — you need to file IRS Form 8283
Deductions exceeding $5,000 per item — you need a qualified appraisal completed by a qualified appraiser
Wait, you ask, is it really that simple? Actually, no, not really. I’ll break it down over the next few days and provide details.