Charitable Contributions

Substantiation of Contributions to Charity

The IRS has reminded taxpayers that several important tax law provisions affecting charitable donations are in effect.

The Pension Protection Act of 2006 (P.L. 109-280) amended the Internal Revenue Code to allow taxpayers over age 70½ to donate up to $100,000 directly from their IRA to a qualified charity.  This provision is currently scheduled to expire at the end of 2009 and is available for IRA distributions regardless of whether the owners itemize their deductions.  Distributions from employer-sponsored retirement plans, including SIMPLE IRAs and simplified employee pension (SEP) plans are not eligible.

As a reminder, charitable donations of money, regardless of amount, must be evidenced by a bank record or a written communication from the charity showing the name of the charity and the date and amount of the contribution.  These requirements do not change the requirement that taxpayers obtain acknowledgment from a charity for each deductible donation (either money or property) of $250 or more.

The IRS also provided other reminders, including:

• Contributions are deductible in the year made.
• Only donations to qualified organizations (churches, synagogues, temples, mosques, government agencies and organizations listed in Publication 78) are tax deductible.
• Noncash donations in excess of $500 must have a properly completed Form 8283 attached to the return to be deductible.
• Deductions for a motor vehicle, boat, or airplane are usually limited to the gross proceeds from its sale if the claimed value exceeds $500 and Form 1098-C or a similar statement must be provided to the donor and attached to the donor's tax return.
• For all donations of property, including clothing and household items, the taxpayer should get a receipt from the charity that includes the name of the charity, date of the contribution, and a reasonably-detailed description of the donated property or keep a written record of the donation that includes this information, as well as the fair market value of the property at the time of the donation and the method used to determine that value.  Clothing and household items, such as furniture, furnishings, electronics, appliances, and linens, generally must be in good used condition or better to be deductible.  Take photos of what you give away to charity. 

Please always consult with your tax advisor regarding the deductibility of charitable contributions and required substantiation.