At this time of year be it the person dressed in the Santa suit ringing the bell in front of some store, or the letter you receive from a local organization, we are all asked to donate money to charitable organizations.
This post is to go over the requirements to make sure you generosity is not only appreciated by the organization but also that the donation qualifies as an itemized deduction on your federal income taxes. Itemized deductions are claimed on Schedule A.
I am addressing only cash or check donations here. If you need information with respect to non cash donations, see the useful link listing below.
The organization receiving your money must be a qualified organization as defined by the IRS. The qualified organizations are:
- 501(c) (3) organizations. These are domestic organizations with one or more of the following purposes:
- Religious
- Charitable
- Educational
- Literary
- The prevention of cruelty to children or animals
- Scientific
- A governmental entity soliciting funds for public purposes – ex: Local Park and Recreation Department, Police Department, Fire Department
- War veterans’ organizations
- Domestic fraternal societies operating under the lodge system
- Certain not for profit cemeteries
The IRS has an on-line publication, Publication 78, you can use to research if an organization is a qualified organization or not. As of the writing of this post it is updated through October 15, 2010.
If you have a doubt about an organization holding itself out to be a 501 (c) (3) type organization you can always ask to see a copy of the organizations most recent tax return as these organizations are required to make their tax returns available to the public.
So you gave some money to a qualified organization, what records do you need to keep?
- Check and credit card donations: a bank record showing the date, the organization and the amount (a cancelled check or check copy from your bank statement or your credit card statement if it lists all the information)
- Cash donations: a written receipt from the qualified organization for cash donations which lists the date, amount received and the name of the organization
- ANY DONATION of $250 or MORE: by cash or check or credit card you need a written acknowledgement from the organization which lists the date, amount of donation, organization and a statement as to whether the organization provided you any goods or not in exchange for the donation.
Bottom line is if you give by check or credit card and the amounts are under $250 per donation your bank and credit card statements will probably contain all the information you are required to keep. If you like making cash donations or giving $250 or more at a time, get the receipt and or letter.
Useful Links:
IRS Publication 526, Charitable Contributions
IRS On-line Search for Charities: Publication 78
Form 8283 and IRS Publication 561 – used for non cash contributions – NOT covered in this post.
The User Friendly CPA 