Keeping Track of Charitable Donations

Another April 15 IRS deadline has come and gone. And while you may be tempted to not tax your brain with such topics for the next few months, the truth of the matter is that a bit of good record-keeping goes a long way towards making next year's tax season less stressful.

For those who itemize their tax returns, the Better Business Bureau offers the following advice regarding charitable donations:

Is your contribution tax deductible?

Don't assume by its name that an organization is indeed a charity. Verify that a group is tax exempt under section 501 (c) (3) of the Internal Revenue Code by asking the organization for a copy of its IRS "Letter of Determination," or consulting IRS Publication 78, the Cumulative List of Organizations available at the library or on the Internet (http://www.irs.ustreas.gov/prod/search/eosearch.html). The only exceptions to these verification sources will be churches and very small charities with less than $5,000 annual income.

Do you know the $250 rule?

To deduct charitable contributions, you must have the proper records depending on the amount given. For separate cash contributions less than $250, a copy of a canceled check or a receipt from the charity are sufficient. If a specific contribution (not cumulative) is over $250, donors also need to obtain a written notice from the charity that identifies the amount of the gift and the value of any goods or services the charity provided in return for the donation.

What is "Quid Pro Quo?"

A "quid pro quo" contribution is one that is partly a donation and partly a payment for goods and services the charity has provided. The most well-known examples of this are the purchase of tickets for fund raising dinners or benefit performances. In general, you can only deduct the portion of a charitable gift that exceeds the "fair market value" of any good or service that was received in return. Most charity invitations will identify the deductible portion of such a purchase. If the purchase amount exceeds $75, the charity is required to disclose the amount.

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