What types of records and
receipts should I maintain?
If you claim a deduction for a
cash contribution, you are required to keep a record showing the date, amount, recipient
and check number if applicable. A cancelled check is adequate for gifts less than $250. If
your contribution is $250 or more, the law requires that you receive a written receipt
from the charitable organization.
The receipt, or acknowledgment, must include the amount
you gave and whether or not you received anything of value as a result of your
contribution. You are not required to combine separate contributions to the same
organization during the year to obtain the $250 limit unless the checks are written on the
Contributions made by payroll deduction are treated as separate
contributions. You must have either a payroll record that proves your deduction or other
documentation from the charitable organization that proves you didn't receive anything of
value as a result of your contribution.
If you contribute property (property is anything other than cash) to
a charitable organization, the kinds of records you must keep depend on the value of the
property you contribute.
If you claim a deduction of less than $250, you must obtain and
keep a receipt from the charity showing the name of the charity, the date of the donation
and location of the property and a reasonably detailed description of the property
donated. A receipt for donated property is not required if you drop the property off at an
unattended drop site, but you must keep reliable written records for each donated item.
If you deduct a property contribution of at least $250 but not more
than $500, you must get and keep a written acknowledgment of your contribution from the
charity which includes a statement of whether the organization gave you any goods or
services as a result of your contribution and a description and good-faith estimate of the
value of those goods and services. This is in addition to a receipt and your own written
If you claim a deduction for a property contribution of more than
$500, you must keep your own written records, a receipt, an acknowledgment, and additional
records. Your written records must include additional information, such as how you
received the property, the approximate date you received the property, and the cost basis
of the property. You must also file Form 8283, Noncash Charitable Contributions.
If you donate property with a value in excess of $5,000, you must
keep all of the records listed above and you must take special measures, such as a written
appraisal, to substantiate your charitable deduction.
What is the deduction for property contributions -
cost or fair market value?
If you donate property, you can generally deduct either the fair
market value of the property or its cost to you, whichever is less. For example, if you
donate clothing or household items, your deduction will typically be an estimated fair
market value which is less than the amount you paid for the items.
If you donate property
that has increased in value and you've held the property for a year or less, the amount of
your contribution is generally your cost. This is an important item to remember if you
plan to donate stocks or bonds that you have held for less than one year. If their value
has increased since your purchase, you may want to wait until a year has passed or simply
donate cash so that you do not lose a portion of your deduction.
If you donate property that you have held for more than a year, and
the property has appreciated in value, you get the best tax break. Assuming you limit your
current year contributions to 30% of your adjusted gross income (instead of the normal 50%
limitation), you can deduct the higher fair market value as a charitable contribution.
you want to use the 50% limitation on your contributions, you'll have to use your cost,
minus any depreciation you were able to take on the property, as your contribution amount.
If you are donating property that has been depreciated, such as
rental property or assets used in your business, you will have to follow special rules to
figure the amount you can deduct.
What if I receive goods or services from my
If you make a contribution to a charity that is more than $75 and
you receive some goods or services, the charity must give you a written statement which
states that you can deduct only the amount of your contribution that is more than the
value of the goods or services you received.
The charitable organization must also include
in the statement a good-faith estimate of the value of the goods or services that you
received (or were entitled to receive).
Certain membership benefits provided in return for a payment of $75
or less can be disregarded. These benefits include free or discounted admission to
facilities or events (except athletic events), free or discounted parking, preferred
access to goods or services, and discounts on the purchase of goods and services. You can
deduct the entire charitable contribution.
The cost of raffle tickets, bingo, or contributions to a charitable
lottery are considered as gambling costs and fall under the gambling rules. You can deduct
gambling losses only up to the amount of gambling winnings that you have. Gambling
winnings are reported as other income on your tax return and losses are deducted on
What about expenses I incur performing charitable
You can deduct certain out-of-pocket expenses that are related to
your charity work such as gas and oil for your car (or a standard mileage rate - 14 cents
per mile in 2014). You should keep a log of the miles you drive for charity and keep in
mind that you cannot include depreciation or repairs and maintenance deductions for
You can deduct parking fees and tolls, whether you use your actual
expenses or the standard rate. You must keep records of your car expenses which include
the name of the organization you used your car for, miles driven, and actual costs if
deducting actual expenses.
Other expenses, such as travel costs or items purchased solely for
the purpose of assisting the charity are deductible. If you travel on behalf of the
charity, you can take the deduction only if there is no significant element of personal
pleasure, recreation, or vacation included in such travel.