As we approach the end of the calendar year, many people look to increase their charitable giving. Perhaps it’s the holiday mood, perhaps its a sudden fear of not having enough deductions for tax return, who knows? What ever the reason, a significant number of donations flood into charities in November and December.
You need to remember that to deduct those good intentions, all donations must have receipts, even cash donations. Those gifts of $250 or more must also have a written acknowledgment from the charity describing the donation and if the donor received anything in return for the donation.
The IRS has proposed to Congress that charities voluntarily report these donations to the Service and the taxpayer by Feb 28th of the following year. If the donee opts in, the donor wouldn’t need a written acknowledgement. But this had NOT been agreed to.
In addition, in a recent audit, IRS auditors insisted on receipts for all donations. The auditor also verified that each charity was a true charity per tax law as well. Those written acknowledgements were checked to make sure the taxpayer deducted any benefit received from the donation as well. Non-cash donations were expected to have a list of the donated items.
Take the time now to put your records in order. It will save you time next March!!!