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Tax Tips for Substantiating Your Tax Deductions for Charitable Contributions

 

Keep Good Records

 

When you give to charity, you win twice, first by supporting good organizations, and second by claiming valuable tax deductions. We leave the choice of charitable entity to you, and instead focus on record-keeping practices that maximize your charitable contribution deductions.

 

To deduct cash, check or other charitable gifts, keep bank records or written communication from the charity showing

 

·

the name of the charitable organization,

·

the date of the contribution, and

·

the amount of the contribution.

For a detailed guide on record-keeping based on amount and type of charitable contribution, see the table at the end of this article.

Personal v. Business Deductions

Personal charitable deductions alleviate your tax burden and add to your bottom-line. However, business deductions are more valuable than personal charitable deductions.

 

Thus, whenever you have a choice between a business and a personal deduction, go for the business deduction.

 

For example, with a business deduction on Schedule C of your Form 1040, you save both

 

·

self-employment taxes, and

·

phaseout taxes caused by a multitude of AGI limits.

If you operate as a corporation, you gain with charity payments as business expenses because you are using pre-tax money for the charity rather than after tax deductions.

 

Here’s one corporate owner example. Say you are going to give $10,000 to a charity. If you earn the money on a W-2 in your capacity as an owner-employee, you pay payroll taxes on the earnings before you can give the $10,000 to the charity. On the other hand, if your corporation can claim the $10,000 payment to this charity as a business expense, you avoid the payroll taxes and either you (if you are an S corporation) or the corporation (C corporation) gets the deduction.

Find More Business Deductions

Check out the topic list for primarily business charitable deductions. Click here.

 

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Charitable Contribution Record-Keeping

Type Contribution

Dollar Amount

Substantiation

Cash

Less than $250

Bank record or written communication from charity

Cash

$250 or more

Contemporaneous written acknowledgement including:

·

charity name

·

date of contribution

·

amount contributed

·

description of any goods or services from charity in exchange for contribution

Property

Less than $250

Receipt from charity or reliable records

Property

$250 to not more than $500

Contemporaneous written acknowledgement including:

·

charity name

·

date of contribution

·

amount contributed

·

description of any goods or services from charity in exchange for contribution

Property

More than $500, but not more than $5,000

Same as above, plus:

·

description of the property

·

how and when you got the property

·

cost and basis

·

Form 8283 attached to your tax return

Property (excluding stock, certain works of art and automobiles)

More than $5,000

Qualified appraisal and Form 8283

Vehicle, boat and airplane

More than $500

Contemporaneous written acknowledgement from charity that meets IRC §170(f)(12)

Publicly traded stock

Any Amount

Form 8283

Privately traded stock

Greater than $5,000 and not greater than $10,000

Form 8283, Part I describing property by donor and Part IV, donee acknowledgement, signed and dated by donee

Privately traded stock

Greater than $10,000

Qualified Appraisal