IRS Getting Tougher on Charitable Donations

We believe that part of living an abundant life is being charity minded. We believe in supporting those in need and helping where we can. That is why we felt it important to pass on the following information about charitable deductions and the IRS.

The bottom line: Where the government once was willing to trust that you weren't padding the deducted value of small gifts, now you're going to need proof that you gave something — and something of real value — if you want to deduct it.

"I don't know if the Salvation Army kettle people are going to start giving receipts, but that's essentially what would be required if you wanted to claim the dollar you contributed as a deduction," said Mark Luscombe, principal tax analyst with CCH Inc., a Riverwoods, Ill.-based publisher of tax information.

Under current law, taxpayers are largely taken at their word when claiming $20 placed in the church collection plate, or the relatively minor amounts of out-of-pocket cash that they might throw into the Salvation Army's annual Christmas kettles.

Documentation has been required only for a donation of $250 or more. But, if audited, taxpayers are expected to supply a written record of how much they gave and to whom.

The new law, however, requires that taxpayers have a receipt or canceled check for every monetary donation. A taxpayer's written record is no longer enough.

So, make sure you get that receipt and keep it! It is important to give to charities that you support, but it is also important to be fiscally responsible. You can still give to your favorite charities and organizations. It is just important that you make sure your records are up to date and include the required items.