• James Robinson CFP

Charitable Gifts - Proper Deductions

Charitable Gifts…give but give wisely and take proper deductions

Do not include the wrath of the IRS Americans give on an average of $390 billion dollars a year in charitable gifts. in 2016. This represents the largest source of charitable, followed by Charitable Foundations and Corporate giving. Online giving has grown way beyond the approximately 17 million people who in 2005, said they had made a donation to a charity online.Servicemembers are among these Americans. Many people give but many are not clear as to the tax-deductible charitable contributions they are entitled to. However, to their credit, the rules related to charitable donations may be somewhat confusing.

Here’s a primer from the IRS: Bank Records and Written Acknowledgments

Taxpayers who plan to claim a charitable deduction on their tax return must do the following:

  1. Have a bank record or written communication from a charity for any monetary contributions.

  2. Get a written acknowledgment from the charity for any single donation of $250 or more.

Here are four facts for taxpayers to remember about these donations and written acknowledgments:Taxpayers who make single donations of $250 or more to a charity must have one of the following:

  1. A separate acknowledgment from the organization for each donation of $250 or more.

  2. Each acknowledgment from the organization must list the amount and date of each contribution of $250 or more.

  3. The $250 threshold doesn’t mean a taxpayer adds up separate contributions of less than $250 throughout the year. For example, if someone gave a $25 offering to their church each week, they don’t need an acknowledgment from the church, even though their contributions for the year are more than $250.

  4. Contributions made by payroll deduction are treated as separate contributions for each pay period. If a taxpayer makes a payment that is partly for goods and services, their deductible contribution is the amount of the payment that is more than the value of those goods and services.

A taxpayer must get the acknowledgment on, or before, the earlier of these two dates:

  • The date they file their return for the year in which they make the contribution.

  • The due date, including extensions, for filing the return.

If the acknowledgment doesn’t show the date of the contribution, the taxpayers must also have a bank record or receipt that does show the date.

IRS Guidance Explains Rules for Vehicle Donations The IRS and Treasury rules generally limit the deduction to the actual sales prices of the vehicle when sold by the donee charity. The rules also require donors to get a timely acknowledgment from the charity to claim the deduction. Donors may claim a deduction of the vehicle's fair market value under the following circumstances:

  • The charity makes a significant intervening use of the vehicle, such as using it to deliver meals on wheels.

  • The charity makes a material improvement to the vehicle, i.e., major repairs that significantly increase its value and not mere painting or cleaning.

  • The charity donates or sells the vehicle to a needy individual at a significantly below-market price if the transfer furthers the charitable purpose of helping a poor person in need of a means of transportation.

The Service has revised Form 1098-C, which is used to provide the written acknowledgment.


The IRS has severe penalties for organizations that provide a false or fraudulent acknowledgment of a vehicle donation or fail to furnish the acknowledgment properly. This includes churches and foundations. REFERENCES AND RESOURCES

  1. Publication 526, Charitable Contributions, Tax Topic 506, Charitable Contributions, Publication 1771, Charitable Contributions Substantiation and Disclosure Requirements | IRS: https://www.irs.gov/charities-non-profits/charitable-organizations.

  2. National Philanthropic Trust: https://www.nptrust.org/philanthropic-resources/charitable-giving-statistics/.

© 2017 by SafeHarbor Financial Collaboration Services

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