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IRS Issues Final Regulations on Substantiation for Charitable Contributions

If you regularly claim deductions for donations, you may need to update your tax record keeping practices --- the Internal Revenue Service (IRS) issued final regulations this summer concerning the correct way to substantiate any charitable contributions you wish to deduct. Under Section 170(f)(8), for contributions of $250 or more, the recipient organization should provide you a receipt at the time of the contribution that shows:

  1. The amount of cash and a description (but not value) of any property other than cash contributed;
  2. A statement of whether the donee organization provided any goods or services in consideration, in whole or in part, for any such cash or property; and
  3. A description and good faith estimate of the value of any such goods or services or, if such goods or services consist solely of intangible religious benefits, a statement to that effect.

The new regulations specifically state that a "blank pledge card is not substantiation" for monetary contributions, even if filled out later by the donor. Donors should use bank records to substantiate these contributions, such as a credit card statement or canceled check from a bank statement, or written communication from the donee that provides the organization name, date of contribution, and amount donated.

Non-cash contributions under $250 in value may be substantiated with a detailed receipt provided by the donee, or a reliable record maintained by the donor of the items donated. Donated items valued between $250 and $500 must be substantiated through a Contemporaneous Acknowledgment form. Donated items valued between $500 and $5,000 should be documented with a Contemporaneous Acknowledgment form and a filed Form 8283, Section A. Non-cash charitable contributions valued $5,000 or more lead to even greater substantiation requirements.

You can read details about the IRS' charitable contribution final regulations (TD 9836) here.

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