Whenever you make the generous gift of property or money to organizations that are eligible to receive tax-deductible charitable contributions, you need to make sure that you get the paperwork correct. As you prepare for tax season, here’s what you need to know about your charitable contributions.
What Do You Need?
When you make your gift, you need to make sure that you:
- Obtain a bank record or written letter from the non-profit for monetary contributions saying how much you gave
- Receive written acknowledgment from the charity for any donations of $250 or more
The Basics of Written Acknowledgements
Whenever you make a donation and need to get a written acknowledgment, keep the following in mind:
- Donations $250 and above should have a written acknowledgment from the charity for each donation of $250+ or one acknowledgment that itemizes all of the donations of $250+. Keep in mind that the $250 threshold is not cumulative, so if you donate $50 five times a year, you will not receive the same acknowledgment. However, if you make two $300 donations, you will need either two acknowledgments, one for each donation, or one acknowledgment that lists the dates and amounts of both.
- Donations that you make through a payroll deduction are treated like separate contributions every pay period.
- If your donation is partially for goods and services, like through a silent auction, the total deductible amount is only the amount that exceeds the value of the goods and services you purchased. The paperwork that the non-profit gives you should note the value of the goods or services you received and the total amount that you donated. For example, if you donated $500 at an auction for a $100 gift certificate, your deductible amount would be $400.
- You need to receive written acknowledgment of your gift on or before the earlier of the following dates: the due date for filing your tax return (including extensions) or the date you file your tax return for the year that you made the contribution.
- If the letter that you receive detailing your donation does not include the date of the contribution, you must have bank records or a receipt prepared to submit.
Tax Planning with Miles Tax Advisory
If you are unsure of whether or not you have the proof of your charitable donations that you need or you are looking to get started on your 2020 tax planning, we are always here to assist you!