COVID Resources

Itemized Deductions from A to Z, Part 7: Charitable Contributions in Cash

This is part seven in our series on Itemized Deductions. To read the rest of the series, click here. For additional information regarding 2014 tax planning, you can download our 2014 Tax Planning Guide from the Resources tab on our website.

Cash contributions are relatively straightforward—you donate $100 to a qualifying charity (no benefit provided to you) and take a charitable deduction for the same amount. From a tax perspective, the most important point is to make sure you have proper documentation.

Some charities are better than others at providing this documentation, with some smaller organizations not having the manpower to provide documentation for all gifts.

For gifts over $250, the IRS requires a written acknowledgement from the charity. While a canceled check will work for gifts under $250, we recommend maintaining written acknowledgements for all cash donations. With scanning technology, it’s easy to hold these in a file and scan them after year-end to ease paper storage.

Planning Tip:
A check dated and postmarked on December 31st is deductible in the same year even if the charity does not process the check until sometime in January. Donations made by electronic bank payment are not deductible until the payment date processed by the bank. Credit card donations are deductible in the year the charge is made, so if made on December 31st make sure you are clear about which year the charge will be processed.

Next time, we’ll look at noncash giving.