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If you’re planning to make a charitable contribution and wish to claim it as a deduction on your taxes you need to be aware of the requirements. Any donation of cash or property with a value of $250 or more requires a contemporaneous written acknowledgement of that gift from the charity. And if you should make more than one contribution of $250 or more in a given year, you should get one or more written acknowledgements from the charity to satisfy your obligations.
If you make separate contributions of less than $250, they do not require a written acknowledgement even if–over the course of a year–they add up to $250 or more. However, conservatively you should always ask for written substantiation–just in case.
It’s important that the written acknowledgement from the charity provide the following information:
If the charity did not provide any goods or services in return for your donation, the acknowledgement must say that. Some charities fail to include such a statement, and this omission can cause your deduction to be disallowed. Be sure to request an acknowledgement that expressly states that no goods or services were provided in return for your donation.
Larger deductions, especially of property, may require additional substantiation of the donation, including an appraisal valuing the property and providing certain information required by the IRS. Failure to obtain this additional substantiation can also result in the disallowance of a charitable deduction.
Donations made through payroll deductions and unreimbursed out-of-pocket expenses incurred while performing services for a charity will also require written acknowledgements from a charity where the payroll deduction or unreimbursed expenses are $250 or more.
Be aware that there is a deadline! You must obtain the written acknowledgement by the earlier of the date on which you file a tax return claiming the deduction or the due date for that return, including extensions. Miss the deadline, and you’ll miss the deduction!
If you have Ayco as a benefit, ask your Ayco advisor for the unique content requirements of charitable contribution substantiation letters.
Note: The requirements/standards referenced in this article are current as of July 2018.
Reference: Publication 1771 (Rev. 3-2016) Catalog Number 20054Q Department of the Treasury Internal Revenue Service www.irs.gov
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Updated for tax year 2022