Fundamental Charitable Giving Tax Requirements

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

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

Proper Documentation Must be Filed with the IRS – Donors may only deduct a charitable contribution that exceeds $250.00 if he or she is given 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 Determined – For cash or publicly traded securities, this requirement is relatively easy 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 innovative giving practices also involve tax and legal requirements.

A result of the considerable nature of these requirements, we always encourage seeking qualified legal counsel to assist you when making donations over $250.00.

For additional guidance and requirements, refer to these IRS Publications:

IRS Publication 561: Determining the Value of Donated Property

IRS Publication 526: Charitable Contributions