Cash Contributions to Charity - New 2006 Tax Documentation Requirements

Effective in 2006 the IRS now requires you to document all cash contributions to charity. I thought it was always required, but there are new rules for cash contributions of less than $250 and for contributions of $250 or more. Each contribution is considered individually, so separate contributions to the same organization are not combined. In other words, if you gave $100 each month to your church, each donation would have to meet the “Under $250″ rules, not the “$250 and Over” rules as if you had given $1,200.

Contributions Less than $250

For cash contributions of less than $250, keep one of the following:

• a canceled check or a legible account statement that includes a check number, amount, transaction date, and to whom paid;
• a receipt from the charitable organization showing the name of the organization, the date of the contribution, and the amount contributed;
• other reliable ‘contemporaneous’ written records that include the name of the organization, the date of the contribution, and the amount of the contribution.

Contributions of $250 or More

For cash contributions of more than $250, you need an acknowledgment of your contribution from the qualified organization.
The acknowledgment must:

• be written;
• include the amount of cash contributed, whether you received any goods or services in exchange for the donation, a description and good faith estimate of the value of any goods or services;
• be received on or before the date you file your return for the year that you made the contribution or by the due date, including extensions, for filing the return, whichever is earlier.

The charities I give regularly to have always provided a statement, but if you give to certain organizations on an irregular basis when they are having ‘fund drives’ or ‘walkathon’ you may not receive a statement. In these situations a cancelled check is your best documentation.

For More Information:

• IRS Publication 526 - Charitable Contributions