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Proving charitable donations

On Behalf of | Nov 15, 2022 | Charitable Giving

Various legal ways exist to reduce tax burdens. One common way New York residents could reduce money owed to the Internal Revenue Service involves making legal charitable donations. The statutes that establish charitable giving as an acceptable tax avoidance may encourage taxpayers to help a good cause. However, those who take charitable giving deductions on their returns will need to provide proof when requested.

Proof of charitable giving

Charitable giving could involve more than sending a recipient a check or making a credit card transaction. Donations of assets, such as cars and furniture, may be possible. Some donors may transfer stock to a charity’s name. Regardless of the specific contribution, it is advisable to procure an official receipt. If the IRS sends a letter asking for proof of a charitable deduction, a copy of a valid receipt may suffice.

Unfortunately, receipts may end up lost, so procuring a copy from the charitable organization may solve the problem. Sometimes, copies of credit card authorizations may suffice if they clearly establish who received the money.

Dealing with IRS inquiries

Responding promptly and thoroughly when the IRS sends a letter requesting proof of charitable contributions might help the situation. Maintaining accurate records regarding tax planning is essential, and keeping a file of receipts and other documents is imperative. The IRS might not ask for documentation immediately after someone files a tax return. The request could come three years later or longer, depending on the amounts in question.

The IRS could deny a charitable deduction based on various factors, including problems perceived with the receipt. Auditors might question the charity’s legitimacy. However, an initial denial may not end things. An appeal could overturn the first decision.

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