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Dec 23, 2015|IRS Audit, Taxes

Charitable contributions and the IRS

The IRS is nosey about charitable contributions

Charitable contributions were, at one time, things people did simply because they saw a need and were able to give. In today’s deduction-driven economy, the level of scrutiny given to all deductions is on the rise. Nobody wants a tax audit, but the IRS allows us the opportunity to give more in charitable contributions if we follow the tax code. This requires us to follow strict laws to avoid paying taxes without crossing the line to tax evasion.

Charities by Radcliff

The hat and the statue

When you file your taxes, you will be asked if you can verify your answers about charitable contributions. A simple YES and the dollar amount is about all they want. Your YES says you have all the necessary backup should the IRS audit your tax return. Whether you choose “That Seasonal Tax Service” or “The Seasonal Tax Office” or a CPA, the answer you give is your legal handshake with the IRS.

Answer YES or NO and the $ amount, then shake hands with the IRS

  • For contributions made with cash to a charitable organization, do you have receipts substantiating the amount given? Receipts are required regardless of the dollar amount, even for as little as a $1 contribution.
  • If yes, what is the amount of cash contributions?
  • For each contribution in the amount of less than $250 and made with checks or credit cards to a charitable organization, do you have a receipt or cancelled check substantiating the amount given? Receipts or cancelled checks are required regardless of the dollar amount, even for as little as a $1 contribution.
  • If yes, what is the amount of check/credit card contributions?
  • For each contribution in the amount of $250 or more and made with checks or credit cards to a charitable organization, do you have written acknowledgement from the charity substantiating the amount given? Written acknowledgements are required. Cancelled checks are insufficient.
  • If yes, what is the amount of check/credit card contributions?
  • For each contribution of clothing and household goods made to a charitable organization valued at an amount of less than $250, are these items in good condition or better?
  • If yes, what is the total value of the clothing or household items given?
  • For each contribution of clothing and household goods made to a charitable organization valued at an amount between $250 and $499, are these items in good condition or better and do you have a receipt substantiating the value of these items?
  • If yes, what is the total value of the clothing or household items given?
  • For each contribution of clothing and household goods made to a charitable organization valued at an amount of $500 or more, are these items in good condition or better and do you have a receipt substantiating the value of these items?
  • If yes, please provide the following information (if more than one contribution, please attach a separate sheet):
  • Name of Charity
  • Address of Charity
  • Total amount given in 2015

Be prepared before you file

Tax preparation is something you do all year. Tax filing is presenting your information to the IRS clearly, concisely, and within the IRS laws of tax avoidance. You don’t want to do this alone–or with somebody who just finished their ten week tax course.

Call me.

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