Donating between $250-$500 multiple times per year to same charity requirements

[JanetA]

I see that for noncash donations between $250 to $500 in value, a receipt or letter that includes the charity's name, address, date, donation location, and description of items donated is needed. I donate frequently and just drop off donations and they give me a receipt (many times it's blank and I fill in the date). I then attach a list of what I donated to that receipt.   Is this sufficient?  Or does the charity need to actually write a letter confirming what was received?  Unless donating something much more valuable, charities don't do this.  I do fill out the 8283 form and am donating to the same charity.

Is this requirement for each individual donation and not the total per year? 

If a letter from the charity is required, is it ok to donate many more times so the total each time falls below $250? If I donate $400 worth of non cash items 10 different times for a total of $4000, could I instead donate $200 worth of items 20 times a year?

[JulieS]

Yes, the receipt from the charity and your written record of what was donated should meet the requirements for Contemporaneous written acknowledgment (CWA).

The CWA doesn't have to be a letter, but it must include the charity's name, address, date, and donation location. You can provide the list of items and description of condition, which must be in good used condition. 

The regulations state there must be sufficient detail to determine fair market value. 

There's no advantage to donating more often because all of your donations of similar items during the year are grouped together to determine the documentation needed. 

[Opus 17]

It really depends on the auditor.  

The rules for donations under $250 and between $250 and $500 are really the same, except for the requirement that the charity indicate on the acknowledgement that the charity did or did not provide goods or services in return for the donation, and for the removal of the "unattended" rule.  The real problem is that a charity will almost never issue a receipt that actually complies with the requirements.  They give you a blank form you can fill in, or staple to your own written inventory.  If you fill in their blank form, but they don't sign it, an auditor could say that's insufficient proof because you might have filled in anything later.  If you staple your inventory to the blank receipt, an auditor could say that doesn't prove you donated those items on that day to that charity, you could have stapled anything together.

If you really want to follow the rules to the letter, you need to fill out the blank receipt with your list of items and then get it signed (or signed again) by a responsible person (who might not be the loading dock attendant).   The charity will likely not attest a specific value, but that's ok as long as you have an independent method of determining the value and you keep those records with the signed receipt.

So it really depends on the auditor.  They are human too, and they have some leeway.  If your records are generally in good order, they are more likely to overlook one or two missed signatures.  If your records are sloppy, they are more likely to nitpick them and deny everything you can't prove.

But yes, for donations over $250, the rules say that the receipt from the charity should include a description of the items--there should be some way that the charity agrees that the items you claim were donated, really were donated.  They sign your list, or they produce a list of their own for you.  But a lot of charities won't do this.

The interpretation of the over/under question is also tricky.  If you make 20 donations of $200 each, a few days apart, and it looks like you were doing that intentionally to stay under the $250 limit for a more detailed receipt, there are some circumstances where they could deny that on the basis that you deliberately skirting the rules.  But again, it depends on the particular auditor, assuming you are unlucky enough to be audited in the first place.  

Deductions of Less Than $250

Except as provided below, no deduction will be allowed for a noncash contribution of less than $250 unless you get and keep a receipt from the qualified organization showing:

1. The name and address of the qualified organization to which you contributed;

2. The date and location of the charitable contribution;

3. A description of the property in sufficient detail under the circumstances (taking into account the value of the property) for a person not generally familiar with the type of property to understand that the description is of the contributed property

A letter or other written communication from the qualified organization acknowledging receipt of the contribution and containing the information in (1), (2), (3), and (4) will serve as a receipt.

If it is impractical to get a receipt (for example, if you leave property at a charity’s unattended drop site), you may satisfy the substantiation requirements by maintaining reliable written records for each item of the donated property.

Your reliable written records must include the following information.

1. The information in (1), (2), (3), and (4) above.

2. If you claim a deduction for clothing or a household item, a description of the condition of the clothing or item.

3. The FMV of the property at the time of the contribution and how you figured the FMV.

Deductions of at Least $250 but Not More Than $500

If you claim a deduction of at least $250 but not more than $500 for a noncash charitable contribution, you must get and keep a contemporaneous written acknowledgment of your contribution from the qualified organization. If you made more than one contribution of $250 or more, you must have either a separate acknowledgment for each or one acknowledgment that shows your total contributions. See CWA, earlier.

The acknowledgment must:

1. Be written.

2. Include:

   1. A description (but not necessarily the value) of any property you contributed,

   2. Whether the qualified organization gave you any goods or services as a result of your contribution (other than certain token items and membership benefits), and

   3. A description and good faith estimate of the value of any goods or services described in (b). If the only benefit you received was an intangible religious benefit (such as admission to a religious ceremony) that generally isn't sold in a commercial transaction outside the donative context, the acknowledgment must say so and doesn't need to describe or estimate the value of the benefit.

3. Be received by you on or before the earlier of:

   1. The date you file your return for the year you make the contribution, or

   2. The due date, including extensions, for filing the return.

[JanetA]

You said: "There's no advantage to donating more often because all of your donations of similar items during the year are grouped together to determine the documentation needed. "

Are you saying if I donate $5400 worth of items, they are all counted as one donation?  Donations over $5000 need a written appraisal, so I'm not sure that is correct.  Could you post a link from the IRS stating that? 

[JanetA]

Thank you for the detailed response.  I do keep really good records.  I keep a list of the items donated and their value.  I scan in the original receipt and the list I created.   I could take my receipts and lists inside to see if someone would sign them and then scan them in. 

Is it ok to have digital copies of the receipts instead of the original?  I'm trying to rid my office of paper and keep everything in digital format that I can. 

[Opus 17]

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@JanetA wrote:

Thank you for the detailed response.  I do keep really good records.  I keep a list of the items donated and their value.  I scan in the original receipt and the list I created.   I could take my receipts and lists inside to see if someone would sign them and then scan them in. 

Is it ok to have digital copies of the receipts instead of the original?  I'm trying to rid my office of paper and keep everything in digital format that I can. 

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I don't know of any reason the IRS would not accept scanned copies.  The IRS rarely does in-person audits anyway. It's far more likely that if they wanted to question your donations, they would send you a letter and you would send back a letter of explanation, maybe a spreadsheet summary, and copies of your receipts. 

[Opus 17]

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@JanetA wrote:

You said: "There's no advantage to donating more often because all of your donations of similar items during the year are grouped together to determine the documentation needed. "

Are you saying if I donate $5400 worth of items, they are all counted as one donation?  Donations over $5000 need a written appraisal, so I'm not sure that is correct.  Could you post a link from the IRS stating that? 

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I believe this is unclear.  You require an appraisal for a "group of similar items" over $5000, even if they are donated to different charities.  I don't know of any specific guidance as to whether donations of household items spread out over time, constitutes a group of similar items.  Partly it will depend on facts and circumstances, and the IRS rather famously uses a "substance over form" doctrine in their rulings.  That is, a transaction can be improper if it has an improper purpose, even if the paperwork is technically correct.  For example, suppose you need to dispose of the contents of a deceased relative's house.  If you donated the items all at once to one charity, you would need an appraisal.  If you donated the items to 5 different charities over 50 different donation days, that is technically under the $5000 limit per donation, but I think the IRS would likely use the "substance over form" rule to say it was really a donation of a "group of similar items" and deny the deduction without an appraisal and proper signatures.

Another principal that is quoted in many tax court cases is that "an income tax deduction is a matter of legislative grace and that the burden of clearly showing the right to the claimed deduction is on the taxpayer”.

I don't know of any Tax Court case or private letter ruling that gets into the details of how to decide if a group of donations falls under this rule (maybe there is, but I don't know about it.  Another place to look might be the IRS manual for auditors).   

I would say that if you are getting close to that $5000 limit, you may want professional tax advice, or you may want to hold your donations until you can get an appraisal.  It's a risk you might be taking.