Over $250: Cash donations of $250 or more require a receipt from the charitable organization or certain payroll deduction records.
Outsize charitable donations: The IRS flags charitable deductions that far exceed the average donation of those at a similar income level. Be aware, too, that such deductions are capped to 60% of your adjusted gross income (AGI) for cash donations and 30% of AGI for stocks and other property.
A member of the management staff must verify that the donation receipts match the completed form and fill in the date of donation/s in this section. In addition, Goodwill's name (Goodwill Retail Services, Inc.), store address and identification number (39-2040239) must be completed.
Because charitable contributions are often tax deductible, taxpayers must furnish proof in the form of an official dated receipt from the receiving organization or some other official transaction record.
For any contribution of $250 or more (including contributions of cash or property), you must obtain and keep in your records a contemporaneous written acknowledgment from the qualified organization indicating the amount of the cash and a description of any property other than cash contributed.
Research a charity before sending a donation to confirm that the charity is real and to know whether the donation is tax deductible. Always get a receipt and keep a record of the donation. Review bank and credit card statements closely to make sure donation amounts are accurate.
Technically, if you do not have these records, the IRS can disallow your deduction. Practically, IRS auditors may allow some reconstruction of these expenses if it seems reasonable.
How much can you deduct for the gently used goods you donate to Goodwill? The IRS allows you to deduct fair market value for gently-used items. The quality of the item when new and its age must be considered. The IRS requires an item to be in good condition or better to take a deduction.
Overestimating home office expenses and charitable contributions are red flags to auditors. Simple math mistakes and failing to sign a tax return can trigger an audit and incur penalties.
The Bottom Line. Charitable contributions must be claimed as itemized deductions on Schedule A of IRS Form 1040. The limit on charitable cash contributions is 60% of the taxpayer's adjusted gross income (AGI). The IRS allows deductions for cash and noncash donations based on annual rules and guidelines.
It is extremely rare for the IRS to audit nonprofits. After all, they are not tax-paying entities. However, there are some scenarios that would incite government and private agencies to ask for one — so it is important to always have your finances ready.
$300 maximum claims rule
This rule states that if the total of your work-related expenses is $300 or less (not including car, travel, and overtime meal expenses, which can be claimed separately), you can claim the total amount as a tax deduction without receipts.
If you claim a deduction for a contribution of non-cash property worth more than $5,000, you will need a qualified appraisal of the non-cash property and must fill out Form 8283, Section B. The IRS will carefully inspect returns that include disproportionately large charitable contributions.
If you want to take a charitable contribution deduction on your income-tax return, you need to substantiate your gifts. You must have the charity's written acknowledgment for any charitable deduction of $250 or more. A canceled check is not enough to support your deduction.
According to the IRS, any kind of donation above $250 should require a donation receipt. The same applies to stock gifts/donations.
For cash donations under $250, you'll need either a bank record (like a canceled check or bank statement) or a written acknowledgment from the charity, which includes the date and amount of your contribution. Bank records are insufficient for cash donations of $250 or more.
Example 2: Individual Acknowledgment Letter
Hi [donor name], We're super grateful for your contribution of $250 to [nonprofit's name] on [date received]. As a thank you, we sent you a T-shirt with an estimated fair market value of $25 in exchange for your contribution.
However, you should be able to provide a bank record (bank statement, credit card statement, canceled check or a payroll deduction record) to claim the tax deduction. Written records, like check registers or personal notations, from the donor aren't enough proof. The records should show the: Organization's name.
You must be able to prove (substantiate) certain elements of expenses to deduct them. Generally, taxpayers meet their burden of proof by having the information and receipts (where needed) for the expenses.
Contributions to 501(c)(3) organizations are tax deductible, meaning that—if you itemize—you can deduct the amount of your donations to 501(c)(3) nonprofit organizations from your taxable income.
Paper tax receipts need to be signed by the employee that accepted the donation.