Tuesday, January 8, 2013

>$250 Donation Acknowledgement

If you give more than $250 to your church and get a letter acknowledging it, make sure the letter includes the information highlighted below.  The Tax Court recently denied over $22000 of donations for a taxpayer who had a letter without the required documentation.  Note also, that you cannot get a backdated letter once you are audited - there are time limits.

The Tax Court decision is HERE

The appropriate section from Pub 526 is below

Acknowledgment.   The acknowledgment must meet these tests.
  1. It must be written.
  2. It must include:
    1. The amount of cash you contributed,
    2. Whether the qualified organization gave you any goods or services as a result of your contribution (other than certain token items and membership benefits),
    3. A description and good faith estimate of the value of any goods or services described in (b) (other than intangible religious benefits), and
    4. A statement that the only benefit you received was an intangible religious benefit, if that was the case. The acknowledgment does not need to describe or estimate the value of an intangible religious benefit. An intangible religious benefit is a benefit that generally is not sold in commercial transactions outside a donative (gift) context. An example is admission to a religious ceremony.
  3. You must get it on or before the earlier of:
    1. The date you file your return for the year you make the contribution, or
    2. The due date, including extensions, for filing the return.
  If the acknowledgment does not show the date of the contribution, you must also have a bank record or receipt, as described earlier, that does show the date of the contribution. If the acknowledgment does show the date of the contribution and meets the other tests just described, you do not need any other records.

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