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IRS Publication 1771, Charitable Contributions – Substantiation and Disclosure Requirements, explains the federal tax law for organizations such as charities and churches that receive tax-deductible charitable contributions and for taxpayers who make contributions.Are you an organization that receives contributions of $250 or more? or Are you an organization that provides goods or services to donors who make contributions of more than $75? or Are you a donor who makes contributions of $250 or more to a charity?
There are two general rules that organizations need to be aware of to meet substantiation and disclosure requirements for federal income tax return reporting purposes:
For information about organizations that are qualified to receive charitable contributions, see IRS Publication 526, Charitable Contributions. Publication 526 also describes contributions you can (and cannot) deduct, and it explains deduction limits. For assistance about valuing donated property, see IRS Publication 561, Determining the Value of Donated Property. Examples of Written Acknowledgments • "Thank you for your cash contribution of $300 that (organization's name) received on December 12, 2001. No goods or services were provided in exchange for your contribution." • "Thank you for your cash contribution of $350 that (organization's name) received on May 6, 2001. In exchange for your contribution, we gave you a cookbook with an estimated fair market value of $60." • "Thank you for your contribution of a used oak baby crib and matching dresser that (organization's name) charity received on March 15, 2001. No goods or services were provided in exchange for your contribution." The following is an example of a written acknowledgment where a charity accepts contributions in the name of one of its activities. • "Thank you for your contribution of $450 to (organization's name) made in the name of its Special Relief Fund program. No goods or services were provided in exchange for your contribution." Written DisclosureRequirement - A donor may only take a contribution deduction to the extent that his/her contribution exceeds the fair market value of the goods or services the donor receives in return for the contribution; therefore, donors need to know the value of the goods or services. An organization must provide a written disclosure statement to a donor who makes a payment exceeding $75 partly as a contribution and partly for goods and services provided by the organization. A contribution made by a donor in exchange for goods or services is known as a quid pro quo contribution. |
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