To Claim a Deduction, Keep Track of Donations
Tax Day is behind us! What better time to start planning for next year’s taxes? Charitable gifts help others, but they also have important benefits for you. Many gift options offer the opportunity to claim a charitable income tax deduction. To do so, you’ll need the proper gift substantiation to satisfy IRS requirements.
Charitable Gift Substantiation
Have you ever accidentally lost or thrown out something of value? In a recent court case, a married couple was denied a tax deduction by the IRS on their donation of almost $1.3 million largely because they lacked proper written acknowledgment of their gift![1]
When you make a gift, we will supply documentation—contemporaneous written acknowledgment—that officially recognizes our receipt of your donation. It is important that you then file and save that substantiation in a place where you can easily retrieve it at tax time next year. Without it, you can’t claim a tax deduction for your gift!
Keep in mind that the nature of gift substantiation changes as the value of your donation goes up. If you choose to make a large, legacy-creating gift, be aware of the relevant substantiation requirements so you won’t lose out on a sizable deduction. Additionally, certain types of gifts (say, a car or closely held stock) require a certified appraisal to determine the fair market value for your tax deduction.
Given the importance of proper substantiation, you may be concerned about receiving the proper credit for your gifts. We are here to help if you have any questions or did not receive the expected documentation for your gift.
To help determine which gifts qualify for an income tax deduction, see the Gift Comparison Chart.
[1] Keefer et al v. United States of America, No. 3:2020cv00836 – Document 86 (N.D. Tex. 2022)
