Charitable donations are a great way for individuals to help out meaningful causes and to also gain a little tax relief when it comes time to cut the check to the IRS. A new article, One Easy Way to Lose that Charitable Deduction by the Wall Street Journal, highlights the importance of getting the proper documentation for every charitable donation you make over $250 dollars. Without the recognized “letter” from the charity outlining the extent of your donation the IRS has the ability to dismiss the deduction completely and without compromise.
According to the article “‘If you don’t have the correct paperwork, there’s no way to fix the problem,’ says Laura Peebles, a director at Deloitte Tax in Washington. She once saw a six-figure deduction for a gift to a university denied because of no valid letter.”
The correct paperwork in this case is a letter from the charity explaining the exact amount of the donation made in addition to whether any goods or services were exchanged for the donation; such as a ticket for a charity dinner. The paperwork must also make sure to state the correct information, by the right date, by the right time because things can get tricky if the information is off. In addition to having all of the right information it must also be in possession of the taxpayer before the filing deadline.
If you are looking to make some donations to a cause this year just make sure you have everything you need to correctly file your return and get those deductions when the time comes.
To the read the entire article by Laura Saunders and hear what happens to those without the proper letter click here.
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