Reminder: Simple Procedural Mistakes Can Lead to Loss of Charitable Gift Deduction

Many recent court cases can serve as a reminder that most judges will adhere strictly to the letter of the law when it comes to allowing the federal tax deduction for charitable donations. Clients should be advised to carefully follow the requirements, especially when it comes to obtaining the required written documentation about the donation. Charitable contributions of at least $250 must be substantiated by a contemporaneous written acknowledgment (CWA), or receipt, from the donee organization, commonly referred to as a charitable receipt. The charitable organization must issue a CWA that states the amount of cash contributed, provides a description of any other property contributed and includes a statement as to whether the organization provided any goods or services in exchange for the contribution. (In most cases, the CWA will simply state that no goods or services were provided in return for the donation.). If the organization did provide any goods or services in exchange for the donation, the receipt must describe them and provide a good faith estimate of their value. The donor must obtain the CWA before the earlier of: (1) the due date for the tax return (including extensions) for the tax year in which the contribution was actually made, or (2) the date the tax return is actually filed. For more information on the substantiation requirements that apply in the charitable giving context, visit Tax Facts Online. : Q 9061.