Many taxpayers know they can deduct charitable contributions if they itemize deductions. Far fewer understand that a legitimate charitable donation can still be denied if the taxpayer cannot properly substantiate it.

The Internal Revenue Code allows charitable contribution deductions, but Treasury Regulations impose detailed documentation requirements. If those requirements are not met, the deduction may be lost—even when the donation unquestionably occurred.

Charitable Contributions Are Authorized by IRC § 170

Internal Revenue Code § 170 generally permits taxpayers to deduct qualifying charitable contributions made to eligible organizations, subject to numerous limitations and requirements.

However, claiming the deduction is only the beginning. Taxpayers must also satisfy the IRS’s substantiation rules.

Treasury Regulations Require Proper Documentation

Treasury Regulation § 1.170A-13 provides detailed substantiation requirements for charitable contributions.

The regulation states, in part:

“No deduction is allowed under section 170 for a charitable contribution unless the donor substantiates the contribution as provided in this section.“

This regulation explains that maintaining adequate records is not merely a recommendation—it is a legal requirement for claiming many charitable deductions.

What Documentation Should You Keep?

The required documentation depends upon the type and amount of the contribution.

Examples include:

• Bank records
• Cancelled checks
• Credit card statements
• Written acknowledgments from charities
• Donation receipts
• Appraisals for certain noncash property
• Contemporaneous written acknowledgments when required by law

The larger the contribution, the greater the documentation requirements generally become.

Cash Contributions

Even relatively small cash donations should be documented.

Acceptable records often include:

• Bank statements
• Credit card records
• Electronic payment confirmations
• Receipts issued by the charitable organization

Simply remembering that you donated money is generally not sufficient.

Noncash Donations

Taxpayers frequently donate:

• Clothing
• Furniture
• Household goods
• Electronics
• Vehicles

These contributions often require additional documentation.

The taxpayer is generally responsible for determining the fair market value of donated property and maintaining records supporting that valuation.

Certain larger donations may also require qualified appraisals and additional IRS forms.

The Contemporaneous Written Acknowledgment Rule

For certain charitable contributions, the donor must receive a contemporaneous written acknowledgment from the charitable organization.

These acknowledgments typically include:

• The charity’s name
• The amount of any cash contribution
• A description (but not necessarily the value) of donated property
• Whether the donor received goods or services in exchange for the contribution

Without this acknowledgment, otherwise valid deductions may be denied.

Why the IRS Focuses on Documentation

Charitable contributions are frequently reviewed during IRS examinations because they often involve factual questions regarding:

• Whether the donation occurred
• Whether the organization qualified
• Whether the value claimed was reasonable
• Whether adequate documentation exists

Good recordkeeping can significantly simplify an audit.

Common Mistakes

Taxpayers frequently make mistakes such as:

• Throwing away donation receipts.
• Estimating values years later from memory.
• Donating property without documenting its condition.
• Assuming every nonprofit organization qualifies for deductible contributions.
• Forgetting to obtain a written acknowledgment before filing the return.

Planning Ahead Saves Problems Later

Maintaining organized records throughout the year is generally much easier than attempting to recreate documentation after receiving an IRS notice.

A simple folder—or even a dedicated electronic folder—can preserve the records needed to support charitable deductions if questions arise.

Speak with a Tax Professional

Charitable contribution rules can become increasingly technical, particularly for large donations, appreciated property, conservation easements, business donations, or noncash contributions. If you have questions about deducting charitable gifts or responding to an IRS inquiry, consulting an experienced tax professional can help ensure that your deductions comply with the Internal Revenue Code and Treasury Regulations.

At Dino Tax Co, we help clients navigate tax matters ranging from unfiled returns to IRS letters and levies and everything in between with clarity and confidence. If you’d like guidance on your situation, schedule a consultation today. Call or text (713) 397-4678 or email davie@dinotaxco.com. We’re here to help you take the next step.