August 8, 2008 12:00 am

Substantiation Rules for Charitable Contributions

Recently released proposed regulations clarify what you must do to prove your charitable contributions. Without this substantiation, no deduction is allowed.

Cash contributions

The law requires that donations of cash, check, or other monetary gifts of any amount must have a written receipt from the charity or a bank recording showing the donation (the name of the charity, the date of the contribution, and the amount of the contribution). If the bank statement alone does not include the charity's name, then it must be accompanied by a photocopy of the check to show the charity's name.

Donations by payroll deduction are substantiated by a pay stub, Form W-2, or other employer-furnished document and a pledge card or other document showing the name of the charity.

There is no exception for nominal cash contributions; all require substantiation. However, the proposed regulations recognize two instances where contributions are exempt from these substantiation requirements:

  • Where the charity has not yet been identified (e.g., certain transfers to a charitable remainder trust).
  • Where the charity has no firsthand knowledge of the payment (e.g., unreimbursed expenses of less than $250 while providing services to the charity).

Property contributions

The type of substantiation required for donations of property ("noncash contributions") depends on the value of that property:

  • Under $250: A receipt or reliance on personal records.
  • $250 to $500: A contemporaneous written acknowledgment from the charity.
  • More than $500 to $5,000: A contemporaneous written acknowledgment and Form 8283, "Noncash Charitable Contributions."
  • More than $5,000 but not more than $500,000: Form 8283 and a qualified appraisal. The appraisal is not filed with the return.
  • More than $500,000: Form 8283 and the appraisal must be filed with the return.

If an appraisal is required, the appraiser' education, experience, and tax identification number must be included. The appraisal's valuation effective date can be no later than the contribution and no more than 60 days before the contribution. Having an appraisal, however, does not prevent an audit; the IRS can challenge the claimed deduction.

Source: REG-140029-07, 8/6/08

Tax Glossary

Fair market value

What a willing buyer would pay to a willing seller when neither is under any compulsion to buy or sell.

More terms