Tax Tips

September 2004

Charitable Contributions:

People commonly forget that charitable contributions, whether cash or non-cash need to be documented.  When a non-cash charitable contribution exceeds $500 for a calendar year, a separate form needs to be filed with the tax return.  This form needs to include to whom the items were donated to, the date of donation, best estimate as to when the items were originally purchased and at what cost, and the value of the donated items (see link in “Resources” for value of donated items).  If a non-cash contribution exceeds $5000 an appraisal is necessary to verify the value of the donated item.

Cash contributions of $250 or more must be documented by an acknowledgement letter from the charity; otherwise the deduction will be disallowed upon audit.  The IRS has deemed that a cancelled check is not sufficient evidence of a charitable deduction.

Remember that for the average taxpayer, every donation of $100 saves approximately $20 in tax, so it is in your best interest to retain all evidence of any donations, cash or non-cash.  December 31 is the last date to make a charitable contribution in order to get that deduction in the current tax year.