We would like to thank you for your generosity in 2018. Your donations, no matter how small, can help those in need daily. If you contributed to a qualified charitable organization in 2018 you should start seeing those contribution statements delivered soon. But if you don’t receive a statement regarding your contributions, can you still claim the itemized deduction on your 2018 tax return? The answer (like so many others regarding tax law) is it depends.
What documentation is required?
The IRS says that to support a charitable deduction, you need to comply with substantiation requirements. Substantiation is basically documented support, or proof, of the contribution. This generally includes obtaining a contemporaneous written acknowledgment from the charity stating the amount of the donation, whether you received any goods or services in consideration for the donation, and the value of any such goods or services.
“Contemporaneous” means the earlier of 1) the date you file your tax return, or 2) the extended due date of your return. So if you made a donation in 2018 but haven’t yet received substantiation from the charity, it’s not too late — as long as you haven’t filed your 2018 return. Contact the charity and request a written acknowledgment.
Keep in mind that, if you made a cash gift of under $250 with a check or credit card, generally a canceled check, bank statement or credit card statement is sufficient. However, if you received something in return for the donation, you generally must reduce your deduction by its value — and the charity is required to provide you a written acknowledgment as described earlier. This would include certain charitable events such as golf outings and dinner events. Additionally, if you donated to a university for rights to purchase tickets to sporting events, you should be aware of how the Tax Cuts and Jobs Act will affect your 2018 charitable contributions deduction.
Substantiation is serious business
Don’t take the substantiation requirements lightly. In one U.S. Tax Court case, the taxpayers substantiated a donation deduction with canceled checks and a written acknowledgment. The IRS denied the deduction, however, because the acknowledgment failed to state whether the taxpayers received goods or services in consideration for their donation.
The taxpayers obtained a second acknowledgment including the required statement. But the Tax Court didn’t accept it because it wasn’t contemporaneous (that is, it was obtained after the tax return was filed).
We’re here to help
Additional substantiation requirements may also apply to certain types of donations. Please contact your Wegner tax professional for guidance on substantiating your charitable donations and maximizing the tax impact of your generosity.
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