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Charitable Contributions: How To Qualify Your Contribution For A Tax Deduction

02/23/2023 Bryan Pautsch, James Alex Bramer

When making a donation of $250 or more with the intent of taking a deduction for a charitable contribution, it is important to understand the substantiation rules set forth by the Internal Revenue Service.

The Internal Revenue Code provides that a charitable deduction for any single contribution of $250 or more shall NOT be allowed unless the taxpayer substantiates the contribution with contemporaneous written acknowledgement (CWA).  The CWA is sometimes referred to as a charitable receipt.  It is the donor’s responsibility to make sure they receive a CWA upon making a charitable donation.  However, it is best practice for charities to provide the information required for a valid CWA within their donor thank you letters.

A cancelled check, credit card charge, a thank you letter, or other statement without a CWA, is not sufficient for a donor to claim a charitable contribution deduction.

A valid CWA must include all of the following criteria:

  • The name of the charity receiving the gift;
  • The amount of the cash contribution;
  • A description (but not the value) of any non-cash contribution;
  • A statement that either:
    • no goods or services were provided by the charity in return for the contribution; or
    • provides a description and good faith estimate of the value of goods and services that the charity provided in return for the gift; or
    • represents that goods or services, if any, that a charity provided in return for the gift was entirely of intangible religious benefit

The “contemporaneous” requirement of the CWA requires the donor to receive the CWA no later than the earlier of the dates between when the tax return was actually filed or the due date (including extensions) for the year in which the gift was made.

A charitable contribution without a proper CWA is not deductible by the donor.

To learn more about various requirements for charities to substantiate their charitable contributions, please contact Bryan Pautsch and James Alex Bramer at bpautsch@vlcpa.comabramer@vlcpa.com or 800.887.0437.

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