A CPA’s Guide to Charitable Tax Contribution Documentation

Year’s ago I went to great lengths to report and document the tax donation of a client’s Picasso.  The tax return was completed and signed by the qualified appraiser, who supplied by the client.  Little did I know that this appraiser was the same person who sold the art to the client.  When challenged by the IRS, the IRS appraiser carried more weight due to his “independence” over our appraiser.

At this time of year, clients ask what kind of tax documentation is needed for their year end tax donations.  Here is a partial list of tax documentation requirements that may help:

1. Cash donations: Written communication from the charity and proof of payment for each donation.
2. Non cash donation of less than $250: Donee receipt.  I always also recommend pictures and a detailed description.
3. Non cash donation of  $250- $500: Contemporaneous written acknowledgement, pictures and a detailed description.
4. Non cash donations between $500 and $5,000: Written acknowledgement with all the aforementioned items along with a detailed history of how purchased, date, cost, and form 8283.
5. Non cash donations over $5,000: Signed Qualified appraisals, form 8283, detailed photos

There are other requirements like for stock, boats, etc.  However, this should provide a good starting point over the next two weeks.  It is recommended that you contact your tax advisor before taking any of these steps.  As CPAs we see  that tax situations vary among taxpayers.  Be careful when claiming tax deductions for any charitble donation.

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