A recent Tax Court case reaffirms the need to substantiate donations. Taxpayers indisputably wrote checks to a church as contributions and provided the cancelled checks. However, they had not received the contemporaneous acknowledgment from the church, and the court held that the IRS had no latitude to allow the deduction.
Substantiation is required. No deduction is allowed for any cash contribution unless the taxpayer maintains a bank record or a written communication from the receiving organization showing its name, the date, and the amount of the contribution. There is no exception for substantiating small cash donations. Therefore, if you put cash in the Salvation Army kettles or in a church offering plate and do not receive an acknowledgment, no deduction will be allowed.
For contributions of $250 or more, no deduction is allowed unless the taxpayer receives written acknowledgment from the recipient, including the amount of cash and a description of any non-cash property contributed, and a statement on whether the recipient provided goods or services in consideration for the contribution.
Generally, for noncash contributions in excess of $5,000, the taxpayer must obtain a “qualified appraisal” and attach Section B of Form 8283 to the tax return. This requirement does not apply to publicly traded stock. In some cases the taxpayer may be required to also attach a copy of the appraisal to his/her tax return.