Protecting the Deductibility of your Donations

March 20, 2013

In a Tax Court decision last year, the Durden family contribution of $25,171 to their church, which they had taken as an itemized tax deduction, was denied on a technicality. While the Durden's had received a year-end statement from their church, acknowledging the contributions, the statement did not say whether any goods or services were provided in consideration for the contributions. In disallowing the deduction the Tax Court noted that the terms of the relevant statute requires an affirmative statement that no goods or services were received, If you have such deductions but do not have the proper paper support, it is not too late. If you received a letter from a charity that does not have the required IRS language, you can go back to the charity and get the right documentation, even if the donation was made last year.  However, the letter should be revised reflecting the original date of the donation. 

Remember, like all other deductions, charitable contributions must meet strict requirements. Under current law, you must have a canceled check, other bank record (such as a credit card statement), or receipt from the qualified organization for any cash contribution. For contributions of $250 or more, you must have a statement from the organization acknowledging the contribution. In prior years, the charitable donation requirements were less stringent. Rather than canceled check, etc., taxpayers could keep "reliable written records" documenting contributions under $250. This is no longer the case. 

If you have specific questions, contact your Perelson Weiner Partner.

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