Daycare Tax Tips

Protect Your Charitable Deductions

Good documentation is required

In 2007 the IRS is tightened up rules for charitable contributions. Please read further and learn how to protect your deductions.

Make sure you have a bank record or receipt for every monetary donation you make. Donations will not be deductible without a canceled check, bank statement, credit card statement, or a receipt/letter from the organization showing the date and amount of the donation.

This requirement particularly affects cash donations normally made to churches, schools, Salvation Army bell ringers, etc. To preserve your deduction it's better to write a check or put the donation on a credit card. If you still give cash, be sure to get an acknowledgement from the organization. Without a letter or receipt, your cash donations will not be deductible.

The record-keeping for noncash monetary contributions is not as onerous, but you do need a written acknowledgement for any donations of $250 or more.

Noncash donations of goods must be better documented and donated items must be in good used condition (except for high value items with an appraisal). No deduction will be allowed for items of minimal value such as used socks and undergarments.

You already know the necessity of a receipt for your donations to the Goodwill, St. Vincent, etc. What changed in 2007 is that you need to write a much better description of the donated items on the receipt or on a separate piece of paper. Listing "three bags of clothing," for example, is no longer sufficient. Be sure to document the type and amount of clothing and household goods you donate.

The IRS believes there is abuse in the area of noncash charitable contributions. To avoid losing this legitimate deduction, take the extra time to document before your drop off.

Last updated 27 November 2013

Posted on 0000-00-00 00:00:00