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How to Protect Charitable Donations From IRS Nitpicking

Charitable contribution deductions will not be allowed for any monetary contributions by cash or check unless the donor maintains a record of the contribution. The record must be in the form of:

an actual cancelled check

a bank record (i.e. a copy of the front of the check included on your monthly bank statement)

an entry on a bank or credit card statement indicating a credit or debit card charge

a written communication from the charity showing the name of the organization, the date of the contribution, and the amount contributed

In the case of a payroll deduction for United Way or any other charity, the IRS instructs:

  • "For a charitable contribution made by payroll deduction, a pay stub, Form W-2, or other employer furnished document that sets forth the amount withheld for a payment to a donee organization, along with a pledge card prepared by or at the direction of the donee organization, will be deemed to be a 'written communication from the donee organization' that satisfies the requirements."
  • You can no longer tell the IRS that you put a five or ten dollar bill in the collection plate each week. You must write a check to the church for the $5 or $10 each week or you must take advantage of the church's "envelope" system, which will provide you with a written receipt at the end of the year.

    The law does not say that all contributions of more than $50 or more than $100 must be documented. It says that all cash contributions must be documented. Again, you must get a receipt!

    For a contribution of $250 or more made in any one day to a charity, in addition to a cancelled check or other record of contribution you must also have a "contemporaneous" written acknowledgement from the donee organization with the name and address of the charity and the date and amount of the contribution. And, very important, the acknowledgement must indicate whether the organization provided any goods or services by the charity in exchange for the donation.

    A written acknowledgment is considered to be "contemporaneous" by the IRS if it's obtained on or before the earlier of (1) the date the taxpayer files the original return for the tax year of the contribution or (2) the due date (including extensions) for filing the original return for the year.

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