Charitable Contributions Update

The IRS has been pretty vocal in letting tax preparers know that they intend on cracking down on charitable contributions from now on. The gap between what taxpayers have reported for their charitable contributions and what the charities have reported receiving has become quite large. So what do you need to keep in mind:

1) DOCUMENTATION: The IRS requires that you have proof for any donation. This proof should at minimum be in the form of a cancelled check or other bank documentation. Any donation in excess of $250 requires a letter from that charitable organization. If you lack documentation, the donation will be disallowed.

2) GOODWILL DONATIONS: The IRS requires you to show that non-cash donations to organizations like Goodwill be in "good condition". In other words you must be able to demonstrate that the donation is essentially not junk and that someone else could use it. So how does one prove this? The best way is to have photographed evidence of your donation. While this might be unrealistic, it is what the IRS wants. My advice would be to write down exactly what you have donated and take a minimal deduction on the tax return.