It’s important to keep the right records from a charity to deduct contributions when filing the 2017 taxes, so you don’t lose the deduction if you’re audited.
The records you need depend on the type and the size of the gift.
“The IRS is unforgiving on charitable contributions. If you don’t have the right pieces of paper, you don’t get the deductions,” said Bill Fleming, a managing director with accounting firm PwC.
Here is the documentation you will need, based on the type of gift:
Cash gifts of less than $250: Keep a canceled check, credit-card receipt, bank record or acknowledgement from the charity showing the date and amount of the contribution. Keep your pay stub showing any contributions you made through payroll deductions.
Gifts of $250 or more: You’ll need a written acknowledgment from the charity including the amount and date of your contribution.
“And the receipt has to have the magic words on it: ‘no goods or services were received,’” Fleming said.
If you do receive a goods or services in exchange for your donation, such as tickets to an event, the charity’s acknowledgment must include an estimated value of the gift, which you would subtract from the deduction you’re claiming. (You don’t have to subtract the value of a token gift, say, a coffee mug.)
Noncash donations: A charity will provide a form acknowledging a gift of clothes or furniture, but it’s up to you to determine the value.
You can deduct the fair market value of the items, which is what you would get for the items based on their age and condition if you sold them.
Some charities, such as the Salvation Army or Goodwill, have value guides that can help. Some tax software programs have value guides, too, such as TurboTax’s ItsDeductible.
Gifts of items worth more than $5,000: You generally need an appraisal valuing items worth more than $5,000, in addition to an acknowledgement from the charity. For more information, see IRS Publication 561, “Determining the Value of Donated Property.”
Charitable mileage and travel: You can generally deduct expenses for your travel while performing services for a charity, including 14 cents per mile driven as well as parking fees and tolls.
Out-of-pocket charitable expenses: You can deduct the cost of items you buy for a charity. Keep receipts of those expenses and the date and reason for the purchase.
Qualified charitable distributions from an IRA: If you’re older than 70½, you can give up to $100,000 each year tax-free from your traditional IRA to charity. It counts as your required minimum distribution but isn’t included in your adjusted gross income.
You’ll receive a Form 1099-R from your IRA administrator reporting your IRA distributions for the year.
But it won’t specify how much was a tax-free transfer to charity, so it’s important to keep a letter from the charity acknowledging the donation.
