Tax 2007: Stricter Charity Donation Rule

While filing your year 2007 tax return, you need to be careful about a new twist in the clause for charity donations.

In previous years, charitable givers didn't need receipts for cash donations under $250, while claiming a deduction for such donations. For 2007 tax return, however, you need substantiation for any amount that you give. Unless you possess a receipt, you can no longer take a deduction for those contributions.

A cancelled check or bank record, or a receipt from the charity will do, as long as the name of the organization, the date and amount of the donation are noted. Taxpayers don't need to file those receipts with their return, but they need to have them on hand in case the IRS decides to have an audit on your return.

Also, note that the IRS now requires any donated clothing or household items donated to be in "good" or better condition to qualify as deductible. If the IRS questions your claim, you'll need to prove the condition and the value of your donation. You may consider photographing your items before donating them, and keep all receipts.

Also, keep in mind another new rule introduced in 2006 that still applies: If you claim donated property worth in excess of $5,000, you need a qualified appraisal.

Related webpages:
IRS publications on charitable donations
IRS publication on Qualified Appraisal