Basic Tax Requirements Of Charitable Giving

In addition to considering the Advantages and Disadvantages of Bequests and Outright Gifts, it is very important to examine some of the legal and tax requirements exacted by the Internal Revenue Service and State taxing authorities:

Organization Must Qualify to Receive Charitable Contributions – IRS Publication 526 provides assistance as to what kinds of organizations are entitled to receive charitable contributions. While this may seem clear, it is the Donor who will actually bear the burden if a receiving organization turns out not to qualify.

Proper Documentation Must be Filed with the Internal Revenue Service – Donors may only deduct a charitable contribution that exceeds $250.00 if he or she receives an Acknowledgment from the qualified organization or certain payroll deduction records. If more than one gift exceeding $250.00 is made, a Donor must obtain either separate acknowledgments for each gift that exceeds $250.00 or one verification that shows their total contributions.

Fair Market Value of the Donated Property must be Assessed – For cash or publicly traded securities, this requirement is relatively straightforward to accomplish. Less clear, however, can be the fair market value of assets that are more difficult to evaluate (i.e. works of art, real estate, etc).

More advanced giving approaches also involve tax and legal requirements.

A result of the important nature of these requirements, we regularly strongly recommend seeking qualified legal counsel to assist you when making donations over $250.00.

For additional information and requirements, check with these IRS Publications:

IRS Publication 561: Determining the Value of Donated Property

IRS Publication 526: Charitable Contributions