By Nathan Vinson, Attorney
English, Lucas, Priest and Owsley, LLP
Almost everyone makes charitable donations of some kind, and many of us expect to deduct the value of those donations from our income when our taxes are being prepared. While it’s not a primary motivator for most who give to charity, it certainly helps spur some giving and motivates some to meet charitable obligations prior to the end of the calendar year.
Here are a few tax rules to keep in mind when making charitable donations of property (i.e. noncash donations), as federal tax law and regulations require certain documentation of gifts depending on the value of the gifts. In tax parlance, these rules are called “substantiation” requirements.
For gifts under $250, minimal documentation is required to claim a tax deduction. While it is generally required that the taxpayer obtain a receipt from the charitable organization, the taxpayer is excused from doing so if getting a receipt is “impractical.”
An example that the tax regulations use is dropping off property (i.e. clothing) at a charity’s unattended drop site (i.e. a Goodwill drop box after store hours). In that instance, taxpayers are required to retain in their own records (but not submit to the IRS) documentation containing:
- the name and address of the charity;
- the date and location of the donation;
- a description of the property, including its value;
- the fair market value of the property contributed and the method used to determine the fair market value; and
- possibly other documentation.
As you can see, it may just be simpler to get the receipt!