8059 / What verification is required to substantiate a deduction for a charitable contribution of $250 or more?

Editor’s Note: The 2017 tax reform legislation eliminated the exception under IRC

Section 170(f)(8)(D) that relieves taxpayers of the obligation of providing a contemporaneous written acknowledgement by the donee organization for contributions of $250 or more when the donee organization files a return with the required information. This provision is effective for tax years beginning after December 31, 2016.¹

Charitable contributions of $250 or more (whether in cash or property) generally must be substantiated by a contemporaneous written acknowledgment of the contribution supplied by the charitable organization.²

The acknowledgment must include the following information: (1) the amount of cash contributed and a description (excluding value) of any property contributed, (2) a statement of whether the charitable organization provided any goods or services in consideration for the contribution, and (3) a description and good faith estimate of the value of any such goods or services, or (4) a statement to the effect that the goods or services provided consisted solely of intangible religious benefits.³ The acknowledgment will be considered “contemporaneous” if it is obtained by the taxpayer on or before the earlier of (1) the date the taxpayer files his return for the year, or (2) the due date (including extensions) for filing the return.⁴ An organization can provide the acknowledgement electronically, such as via an e-mail addressed to the donor.⁵

For contributions of property other than money, the taxpayer is generally required to maintain a receipt from the donee organization showing the name of the donee, the date and location of the contribution, and a description of the property. The value need not be stated on the receipt.⁶

Generally, charitable contributions of $250 or more made by an employee through payroll deduction may be substantiated with a combination of two documents: (1) a pay stub, Form W-2, or a document furnished by the taxpayer’s employer that sets forth the amount withheld from the taxpayer’s wages, and (2) a pledge card or document prepared by or at the direction of the donee organization that states that the organization does not provide goods or services as whole or partial consideration for any contributions made by payroll deduction. The amount withheld from each paycheck is treated as a separate contribution. Therefore, the substantiation requirements of IRC Section 170(f)(8) will not apply to such contributions unless the employer deducts $250 or more from a single paycheck for the purpose of payment to a donee organization.⁷

Certain goods or services received by a contributing taxpayer (quid pro quo contributions) may be disregarded for substantiation purposes (see Q 8056).