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By Liza Horvath


Year End Gifting and Donations


As the end of the year approaches many begin to think about tax planning and making year-end gifts or charitable donations. Over the past few years there has been a substantial increase in IRS activity as it relates to both cash and non-cash charitable donations. The cost of failing to obtain the appropriate receipts, acknowledgement letters or appraisals may be high – the IRS can disqualify your gift for tax deduction purposes. Defective paperwork can result in the loss of the charitable deduction on your income tax and, while it is true that most donors do not give just to get a tax write off, a tax deduction is always a good thing.


The type of documentation needed to support a charitable donation varies with the value and kind of donation you wish to make. Most planned giving professionals that work for charities know the regulations and can be helpful in making sure your donation will pass IRS rules, but here is a quick synopsis of the rules pertaining to cash donations. If you have questions or are unclear on what documentation is needed, consult your tax advisor.


If you are giving a donation by cash, check, charge card or payroll deduction, the rules are fairly straightforward: for donations of less than $250, you should keep a copy of the canceled check or receipt or obtain a letter from the donee organization that lists your name, the date and amount of the donation along with the name of the organization. If you are giving via payroll deduction, your pay stub will suffice as evidence for your contribution. If you give more than $250, you must obtain a written acceptance from the organization – a canceled check or credit card statement is not enough. Acknowledgement from the organization should include the amount you gave, whether any goods or services were given to you in connection with the gift and, if so, what the values are for those goods. For instance, if you attended the fantastic Sabu’s Safari – Salvation Army benefit last week, you received a wonderful dinner along with entertainment. If you bid on and won a trip at the auction, the receipt you get would state the value of the meal and the auction item.


If you have your own family foundation, the same rules apply. If you gift to your foundation, be sure to write yourself a receipt or acknowledgement letter. Unreimbursed expenses that you incur doing work for your family foundation or a public charity – an airline ticket to attend a board meeting, for instance – are considered cash donations and can be taken as a charitable deduction on your tax return. If less than $250, a canceled check or credit card bill will suffice. If more than $250, you need a letter from the organization acknowledging the “donation.”


Tax laws are complex and can be a challenge but one thing is certain, our charities and non-profits need our donations more than ever. The deductibility is a bonus, just be sure to have the right documentation to meet IRS requirements – if asked.


Are you considering the donation of fine art, antiques, land or other high-value items to your favorite charity? If so, you need to consider what the IRS requires in terms of receipts, appraisals and owner title. Next week’s Senior Advocate will cover non-cash donation requirements so, until next week, happy giving!

Liza Horvath has over 30 years experience in the estate planning and trust fields and is the president of Monterey Trust Management, a financial and trust management company. This is not intended to be legal or tax advice. If you have a questions call (831)646-5262 or email liza@montereytrust.com










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