As autumn approaches, you might begin thinking about what charities you want to favor at year-end. But this year, you really need to stay on your toes.
Reason: Strict new record-keeping rules apply to cash and cash-equivalent donations made in 2007.
So long as you meet the tax-law requirements, you can write off donations made as late as Dec. 31, on your 2007 tax return.
Strategy: Make sure you properly document all monetary contributions. To avoid potential hassles, refrain from giving cash gifts. When possible, write a check or charge it instead.
If the IRS challenges the amounts, and you can’t produce the necessary records, you won’t receive a deduction for those items.
Here’s the skinny: Prior to this year, some taxpayers played fast-and-loose with the charitable gifts record-keeping rules. Under prior rules, a cash contribution could be substantiated by:
- A canceled check.
- A receipt from the charitable organization showing its name, the contribution date and the amount of the contribution.
- Other reliable written records.
But the Pension Protection Act of 2006 imposes new donation requirements for the tax years beginning after Aug. 17, 2006. The IRS will not allow a deduction for a contribution made by cash, check or any other monetary gift unless you maintain a bank record of the contribution, such as a bank statement, canceled check, credit card statement or
Note: The IRS does not allow a de minimis exception. The new rules apply to all monetary contributions, no matter what the amount. For cash gifts of $250 or more, you must have written communication from the charity. A bank record is not sufficient.
That tax-law change more closely aligns the cash-contribution record-keeping rules with the rules for charitable gifts of property. You can’t simply keep a cash-contribution log or other written records like you did in the past.
Keep this requirement in mind when you throw loose change or dollar bills into a collection plate or bucket. It’s a generous act, but you won’t be able to substantiate those contributions.
Tip: A credit card statement or a printout that verifies an online contribution should satisfy the new rules.
Like what you've read? ...Republish it and share great business tips!
Attention: Readers, Publishers, Editors, Bloggers, Media, Webmasters and more...
We believe great content should be read and passed around. After all, knowledge IS power. And good business can become great with the right information at their fingertips. If you'd like to share any of the insightful articles on BusinessManagementDaily.com, you may republish or syndicate it without charge.
The only thing we ask is that you keep the article exactly as it was written and formatted. You also need to include an attribution statement and link to the article.
" This information is proudly provided by Business Management Daily.com: http://www.businessmanagementdaily.com/7101/it-just-got-harder-to-give-away-your-cash "