Charitable Giving - 5 Mistakes to Avoid - Part 1
By Greg Hammond, CFP®, CPA
Charitable giving provides benefits for the non-profit organization receiving the gift and for you. You can free up additional funds for charitable giving by being more effective with your charitable donations Are you currently giving in the most efficient and beneficial way? Avoid these 5 common mistakes so you can give more and make a greater impact on the non-profit organizations and causes you care about.
1. Not Keeping Accurate Records for Gifts
In 2012 the Tax Court upheld a decision by the IRS to deny a taxpayer a charitable deduction for $22,517 in contributions made to his church. The reason was that he did not receive the proper acknowledgement of his contributions in a timely manner.
Having voided checks or a simple receipt may not be sufficient to support your charitable deduction. For gifts under $250, a cancelled check or bank statement is enough. For larger gifts, the charity must provide a contemporaneous written receipt or letter that states the name of the organization, the date and amount of the donation and whether any goods or services were given to you as a result of the gift.
In the court case mentioned above the taxpayer did go back to his church to obtain the proper acknowledgement of his contributions. However, the court did not accept the second acknowledgement because it did not meet the contemporaneous written acknowledgement requirement. The IRS defines contemporaneous as the earlier of the date of filing or the extended due date,including extensions, of the tax return. If you have not filed your tax return for last year you still have time to obtain a proper written acknowledgement for contributions you made to a charity.