Substantiating Charitable Contributions

September 1, 2013

By Gregory S. Dowell, CPA


Clients often ask us how much they can claim as charitable contributions on their tax returns. While we can tell the client ultimately how much can be deducted once we have all the information, the starting point for the exercise must come from the client, and it requires good recordkeeping. Typically, the starting point is to make a list of all the gifts made during the course of the year, and then to determine the value of what was given to the organized charity.


With gifts of cash (“cash” means checks and credit cards, for this purpose), determining the value is relatively easy. It’s a matter of adding up all of the checks issued during the year to organized charities or looking through the credit card statements to determine the gift amounts. By the way, credit card gifts are included for the year in which the charge hit the credit card account, not for the year in which the credit card statement was paid.


With non-cash gifts (gifts of property), it becomes more difficult, as the fair market value of the donated property may not be as readily attainable. Two types of non-cash gifts are the most common: 1) gifts of personal property, such as clothing or household goods, and 2) gifts of stock. Gifts of personal property are usually valued at the thrift shop value. If, for instance, a coffee stand would sell for $25 at a resale shop, the taxpayer may deduct $25 as the value of the gift. Immediately, the challenge becomes obvious: It is often not easy to put a value on the article of clothing or furniture that was donated. With gifts of stock or other securities, it is a matter of determining the mean value on the date of the gift. The mean value is determined by averaging the high and low for the day, and the information can be obtained online or from a broker.


Regardless of size, a taxpayer must be able to substantiate (or prove) every gift that is claimed if challenged. In addition, contributions of $250 or more require a written receipt from the charity. If you donate property valued at more than $500, additional requirements apply. The following discussion will help identify what records must be maintained to substantiate the charitable gift:


  1. For a contribution of cash, check, or other monetary gift, regardless of amount, you must maintain a bank record or a written communication from the donee organization showing its name, plus the date and amount of the contribution. Any other type of written record, such as a log of contributions, is insufficient.
    2.For a contribution of property other than a monetary gift, you generally must maintain a receipt from the donee organization that shows the organization’s name, the date and location of the contribution, and a detailed description (but not the value) of the property. If circumstances make obtaining a receipt impracticable, you must maintain a reliable written record of the contribution. The information required in such a record depends on factors such as the type and value of property contributed.

    3. If the contribution is worth $250 or more, stricter substantiation requirements apply. No charitable deduction is allowed for any contribution of $250 or more unless you substantiate the contribution with a written receipt from the donee organization. Tax laws require that you have the receipt in hand when you file your return (or by the due date, if earlier) or you will not be allowed to claim the deduction.

    4. The receipt must set forth the amount of cash and a description (but not the value) of any property other than cash contributed. It must also state whether the donee provided any goods or services in return for the contribution, and if so, must give a good faith estimate of the value of the goods or services.

    5. If you received only “intangible religious benefits,” such as attending religious services, in return for your contribution, the receipt must say so. This type of benefit is considered to have no commercial value and so doesn’t reduce the charitable deduction available.

    6. In general, if the total charitable deduction you claim for non-cash property is more than $500, you must attach a completed Form 8283 (Noncash Charitable Contributions) to your return or the deduction is not allowed. In general, you are required to obtain a qualified appraisal for donated property with a value of more than $5,000, and to attach an appraisal summary to the tax return. However, a qualified appraisal is not required for publicly-traded securities for which market quotations are readily available. A partially completed appraisal summary and the maintenance of certain records are required for (1) nonpublicly-traded stock for which claimed deduction is greater than $5,000 and no more than $10,000, and (2) certain publicly-traded securities for which market quotations are not readily available. A qualified appraisal is required for gifts of art valued at $20,000 or more. IRS may also request that you provide a photograph.

    7. If an item has been appraised at $50,000 or more, you can ask IRS to issue a “Statement of Value” which can be used to substantiate the value.


Recordkeeping for contributions for which you receive goods or services – In some cases, a taxpayer will receive something of value in return for a contribution. If you receive goods or services, such as a dinner or theater tickets, in return for your contribution, your deduction is limited to the excess of what you gave over the value of what you received. For example, if you gave $100 and in return received a dinner worth $30, you can deduct $70.


The tax laws recognize that the value of some goods a taxpayer might receive are inconsequential. A taxpayer’s contribution is fully deductible if:

  • you received free, unordered items from the charity that cost no more than $10.20 in 2013 ($9.90 in 2012) in total;
  • you gave at least $51 in 2013 ($49 in 2012) and received only token items (bookmarks, key chains, calendars, etc.) that bear the charity’s name or logo and cost no more than $10.20 in 2013 ($9.90 in 2012) in total; or
  • the benefits that you received are worth no more than 2% of your contribution and no more than $102 in 2013 ($99 in 2012).


If you made a contribution of more than $75 for which you received goods or services, the charity must give you a written statement, either when it asks for the donation or when it receives the donation, telling you the value of those goods or services. Be sure to keep these statements.


Cash contribution made through payroll deductions. You can substantiate a contribution that you make by withholding from your wages with a pay stub, Form W-2, or other document from your employer that shows the amount withheld for payment to a charity. You can substantiate a single contribution of $250 or more with a pledge card or other document prepared by the charity that includes a statement that it doesn’t provide goods or services in return for contributions made by payroll deduction.


The deduction from each wage payment of wages is treated as a separate contribution for purposes of the $250 threshold.


Substantiating contributions of services – We are sometimes asked if a taxpayer can deduct the value of their time or the value of something they’ve created and then donated to charityThe simple answer is no – the value of time or the fair market value of the creation is not deductible. Although you cannot deduct the value of services you perform for a charitable organization, some deductions are permitted for out-of-pocket costs you incur while performing the services. You should keep track of your expenses, the services you performed and when you performed them, and the organization for which you performed the services. Keep receipts, canceled checks, and other reliable written records relating to the services and expenses.


As discussed above, a written receipt is required for contributions of $250 or more. This presents a problem for out-of-pocket expenses incurred in the course of providing charitable services, since the charity often does not know how much those expenses were. Sometimes, you can contact the charity and “coach” them through the process of understanding what to include in the substantiation letter. In addition, you can satisfy the written receipt requirement if you have adequate records to substantiate the amount of your expenditures, and get a statement from the charity that contains a description of the services you provided, the date the services were provided, a statement of whether the organization provided any goods or services in return, and a description and good-faith estimate of the value of those goods or services.


This is not intended to be all-inclusive, but will provide a good, basic guide to the documents that will be needed to substantiate charitable contributions.

By Greg Dowell July 10, 2025
How the Tax Act impacts businesses
By Greg Dowell July 10, 2025
Key information for individuals
By Greg Dowell March 17, 2025
The annual list of tax scams was recently released by the IRS, see article below.
By Greg Dowell March 17, 2025
Rates remain unchanged for 2nd quarter 2025
By Greg Dowell January 24, 2025
To those of us NOT in government, we ask why did this take so long?
By Greg Dowell January 24, 2025
How much impact will Trump's executive order have on the IRS.
By Greg Dowell January 23, 2025
Improve profitability, reduce the opportunity for fraud, focus on your core business, eliminate excuses for tardy financial data - what's not to love about outsourcing your accounting?
By Greg Dowell January 17, 2025
Maybe it's an inheritance, a bonus at work, or some other cash windfall - the question is when and how is the best way to invest?
By Greg Dowell January 16, 2025
Baby, it's cold outside - let's talk financial matters and investments!
By Greg Dowell December 31, 2024
As you may be aware, you can't keep retirement funds in your account indefinitely. You generally have to start taking withdrawals from your IRA, SIMPLE IRA, SEP IRA, or 401(k) plan when you reach age 73. Roth IRAs do not require withdrawals until after the death of the owner. Your required minimum distribution (RMD) is the minimum amount you must withdraw from your account each year. You can withdraw more than the minimum required amount. Your withdrawals will be included in your taxable income except for any part that was taxed before (your basis) or that can be received tax-free (such as qualified distributions from designated Roth accounts). We typically instruct our clients to turn to their investment advisors to determine if they are required to take an RMD and to calculate the amount of the RMD for the year. Most investment advisors and plan custodians will provide those services free of charge, and will also send reminders to their clients each year to take the RMD before the deadlines. That said, it is still good to have a general understanding of the RMD rules. The RMD rules are complicated, so we have put together the following summary that we hope you will find helpful: When do I take my first RMD (the required beginning date)? For an IRA, you must take your first RMD by April 1 of the year following the year in which you turn 73, regardless of whether you're still employed. For a 401(k) plan, you must take your first RMD by April 1 of the year following the later of the year you turn 73, or the year you retire (if allowed by your plan). If you are a 5% owner, you must start RMDs by April 1 of the year following the year you turn 73. What is the deadline for taking subsequent RMDs after the first RMD? After the first RMD, you must take subsequent RMDs by December 31 of each year beginning with the calendar year containing your required beginning date. How do I calculate my RMD? The RMD for any year is the account balance as of the end of the immediately preceding calendar year divided by a distribution period from the IRS's "Uniform Lifetime Table." A separate table is used if the sole beneficiary is the owner's spouse who is ten or more years younger than the owner. How should I take my RMDs if I have multiple accounts? If you have more than one IRA, you must calculate the RMD for each IRA separately each year. However, you may aggregate your RMD amounts for all of your IRAs and withdraw the total from one IRA or a portion from each of your IRAs. You do not have to take a separate RMD from each IRA. If you have more than one 401(k) plan, you must calculate and satisfy your RMDs separately for each plan and withdraw that amount from that plan. May I withdraw more than the RMD? Yes, you can always withdraw more than the RMD, but you can't apply excess withdrawals toward future years' RMDs. May I take more than one withdrawal in a year to meet my RMD? You may withdraw your annual RMD in any number of distributions throughout the year, as long as you withdraw the total annual minimum amount by December 31 (or April 1 if it is for your first RMD). May I satisfy my RMD obligation by making qualified charitable distributions? You may satisfy your RMD obligation by having the trustee make qualified charitable distribution of up to $108,000 in 2025 ($105,000 in 2024) to a public charity (some public charities excepted). The amount of the qualified charitable distribution will not be included in your income. You may also make a one-time election to make qualified charitable distributions to certain charitable trusts or a charitable gift annuity. What happens if I don't take the RMD? If the distributions to you in any year are less than the RMD for that year, you are subject to an additional tax equal to 25% of the undistributed RMD (reduced to 10% if corrected during a specified time frame).
More Posts