Charitable Contribution Substantiation
The federal Pension Protection Act of 2006 changed what was required of taxpayers to substantiate the charitable contribution deduction on their tax returns. California conformed to these increased substantiation requirements in the Conformity Act of 2010 for tax years beginning on or after January 1, 2010.
Your clients must keep adequate records to prove the amount taken as itemized deductions. The kind of records required depends on the amount of the contributions and whether they are:
- Cash contributions.
- Noncash contributions.
- Out-of-pocket expenses when donating services.
All cash contributions, regardless of amount, require either a bank statement, receipt from the charity, or a payroll deduction record. For cash donations of $250 or more, a written acknowledgment from the charitable organization is also required. Noncash contributions require additional documentation that varies depending on the value of the donation.
|Noncash Donation||Documents to Substantiate|
|Less than $250||Receipt from charity with name, date, and description of donation|
|Greater than $250 but less than $500||Contemporaneous written acknowledgment from charity|
|Greater than $500 but less than $5,000||Written acknowledgment (as above) plus file IRS Form 8283, Noncash Charitable Contributions|
|Greater than $5,000 (not including stock, art, and autos)||Qualified appraisal and IRS Form 8283|
For clients who donate clothing and household items and receive only a receipt from the charity with a date, it is important that they keep detailed descriptions of items donated as well as the condition of the items in order to substantiate the value of the donation. It is up to the taxpayer to prove "good used condition or better," so taxpayers may also want to consider taking pictures.
Specialty items including stocks, certain works of art, automobiles, boats and airplanes also have specific documentation requirements to substantiate the contribution amount. For more information on charitable contributions and documents needed to substantiate deductions, see the IRS Publication 526, Charitable Contributions.