Michael H. Lester, J.D., CPA
Business Management

1990 Westwood Blvd. #200
Los Angeles CA 90025
Phone: (310) 446-0088; Facsimile: (310) 446-0079

"TIP OF THE MONTH"
(March 1996)

When Do You Need Receipts for Charitable Donations?

You need a receipt if you made a charitable donation to one donee of $250 or more. Your cancelled check is not sufficient. You must obtain the receipt at the time of the donation, unless the donee files a return with the Internal Revenue Service reporting the donation. There is no required format for the receipt, but it must show the amount of cash donated, a description of non-cash property donated, and a good faith estimate of the value of any goods or services the donee gave you in exchange for the donation. If the donee gave you no goods or services in exchange for the donation, the receipt must state that fact.

You should report charitable donations on schedule A of Form 1040. However, you must report non-cash donations over $500 on form 8283. Moreover, you must get an independent appraisal for non-cash gifts over $5,000.

Other things you should know about charitable donations:

Generally, charitable donations are deductible only in the year you pay them. However, if you pay by credit card, they are deductible in the year they are charged to the credit card account.
You can only deduct charitable donations you make to qualifying organizations.
Your transportation and travel expenses may be deductible if you perform services for a charitable organization.
Special rules apply to charitable donations of appreciated property.
You cannot deduct charitable donations that exceed 50% of your adjusted gross income, but you may be able to deduct the excess in future years.

Caveats

This is only a general discussion of some of the rules about Charitable Donations. There are more details, special rules, and exceptions not discussed here. You should consult a professional tax advisor if you are not sure how the rules apply to your particular situation.

As always, general advice may not apply to your specific situation, and rules change constantly, so you should get a professional opinion before you rely on this information.

Prior Months' Tax Tips

Read the "Tip of the Month" for February 1996. "Who Qualifies as Head of Household?"
Read the "Tip of the Month" for January 1996. "Save Taxes. Open an Individual Retirement Account."
Read the "Tip of the Month" for December 1995. "Economic Reality Audits. Should You Be Afraid?"
Read the "Tip of the Month" for November 1995. "Should You Buy or Lease Your Next Car?"
Read the "Tip of the Month" for October 1995. "Save Taxes! Put Your Junior Programmers to Work"
Read the "Tip of the Month" for September 1995. "California Statutory Wills"

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Michael H. Lester (mhl@michael-lester.com)
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Michael H. Lester, J.D., CPA Business Management

Caveats

Prior Months' Tax Tips

Michael H. Lester, J.D., CPA
Business Management