Charitable Giving: How to Properly Document Your Donations for Tax Deductions

ARTICLE | October 22, 2024

Authored by Vasquez + Company

Charitable donations can effectively reduce taxable income and the size of taxable estates. However, to deduct these gifts, taxpayers must adhere to IRS documentation requirements. This article, "To Deduct Charitable Gifts, You Need Proper Documentation," outlines the necessary substantiation methods for cash and noncash donations, including the importance of contemporaneous written acknowledgments (CWAs) and specific forms required for larger donations.

Key Points:

• Cash Donations: Must be substantiated by bank records or written communication from the charity.
• Contemporaneous Written Acknowledgement: Required for cash donations of $250 or more, detailing the contribution and any goods/services received.
• Noncash Donations: Have varying documentation requirements based on the donation amount, including receipts and potentially qualified appraisals.
• Complex Rules: Working with a tax advisor is crucial for large or varied donations to comply with IRS regulations.

By understanding and following these rules, donors can receive their rightful tax deductions.

For more information, read the full article here.

Our firm provides the information for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. This article is not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided “as is,” with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.