To deduct charitable contributions, taxpayers must comply with strict substantiation rules, and failure to do so can jeopardize the entire charitable deduction. However, taxpayers can take practical steps to obtain all the necessary documentation and properly report contributions on their tax returns, and NCF experts can help.
General rules for cash contributions
Cash contributions, regardless of amount, cannot be deducted unless the taxpayer maintains a record of the contribution (Sec. 170(f)(17)). This record can be a bank record or written communication from the donee that shows the name of the donee organization, the date of the contribution, and the amount of the contribution.
Final Sec. 170 regulations issued on July 30, 2018, provide that a bank record includes a statement from a financial institution, an electronic fund transfer receipt, a canceled check, a scanned image of both sides of a canceled check obtained from a bank website, or a credit card statement (Regs. Sec. 1.170A-15(b)(2)). Further, the regulations affirm that an email is a sufficient written communication. However, the preamble to the regulations (T.D. 9836) states that blank pledge cards provided by a donee but filled out by the donor are not sufficient substantiation for cash contributions because they do not contain the information required under Sec. 170(f)(17).
Contributions of $250 or more require contemporaneous written acknowledgment from the donee organization. The written acknowledgment must include all of the following:
- The donee organization name;
- The date of receipt;
- The amount of any cash the taxpayer paid;
- A description (but not necessarily the value) of any property other than cash the taxpayer transferred to the donee;
- A statement whether the donee organization provided any goods or services in consideration for the donation;
- A description and good-faith estimate of the value of goods or services (other than intangible religious benefits) that a donee organization provided in return for the contribution; and
- If the donee organization provided any intangible religious benefits, a statement to that effect (Sec. 170(f)(8)(B) and Regs. Sec. 1.170A-13(f)(2)).