facebook twitter instagram linkedin google youtube vimeo tumblr yelp rss email podcast blog external search brokercheck brokercheck
%POST_TITLE% Thumbnail

Military Finances 101: Documenting Your Charitable Contributions

Taxes

Turkey Day is almost here. We know what comes after that. Charitable Giving season. Many of us make significant charitable contributions between now and the end of the year. But, like many things in military life, if the contributions aren’t documented correctly, they didn’t happen.

When Do You Document the Contributions?

To begin with, your documentation has to be contemporaneous (that’s the word the IRS uses). That means you can’t wait until the IRS calls and then put the documents together. You have to get the documentation before your file your tax return and preferably as close to possible to the date of the actual contribution.

Documentation for Cash Contributions

You must maintain a record of cash contributions. Options include a bank record or written communication from the donee. The written communication should include the name of the charitable organization, the date of the contribution and the amount of the contribution. Multiple contributions can be documented on a single form.

In the case of payroll deductions, like the CFC, your pay statements count for documentation as long as you have the form you filled out to make the contribution.

If you contribute $250 or more to single charity in a single contribution your documentation must also contain whether the charitable organization provided any goods or services in return for the donation. As an example, the value of a charitable dinner would need to be included and would reduce the amount of the charitable contributions. Religious organizations should include a statement that only “intangible religious benefit” was received for contributions given as an offering.

Documentation for Non-Cash Contributions

In the case of non-cash contributions, there are several different levels of documentation. For contributions of less than $250 you need the name and address of the charitable organization, the date of the contribution and a description of the property. If you are gifting securities (which can be a really good idea), you need to include information about the security.

If your contribution exceeds $250 but is less than $5,000, then you need a written (contemporaneous) acknowledgement from the charity.

If your contribution exceeds $5,000 you need to do the same as above but you must obtain a qualified appraisal conducted by a qualified appraiser and complete and file a Form 8283. The 8283 needs to include information about the appraiser.

There are other rules for contributions in excess of $500,000, but I’ll skip them.

There are different rules for donating autos, so if you go this route, you’ll want to check them out.

It Isn't Simple and It Takes Time

If you've succeeded in the military, you can figure most things out. That probably is true with the tax code as well. But, you can't assume that you and your tax software know what needs to be done. If you don't want to spend the time to learn the intricacies of our tax code and how to use the tax code to your advantage in your financial plan, give us a call.


If you found this article useful, you might like the following blog posts:

Watch Out for this Tax Tripwire


Military Finances 101: Inheritance and Estate Taxes. Do You Know the Difference?


Military Finances 101: What Is the Difference Between a Tax Credit and Tax Deduction?




Disclaimer
Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by C.L. Sheldon & Company, LLC ), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from C.L. Sheldon & Company, LLC . To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. C.L. Sheldon & Company, LLC is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the C.L. Sheldon & Company, LLC ’s current written disclosure statement discussing our advisory services and fees is available for review upon request. DISCLAIMER OF TAX ADVICE: Any discussion contained herein cannot be considered to be tax advice. Actual tax advice would require a detailed and careful analysis of the facts and applicable law, which we expect would be time consuming and costly. We have not made and have not been asked to make that type of analysis in connection with any advice given in this blog post. As a result, we are required to advise you that any Federal tax advice rendered in this blog is not intended or written to be used and cannot be used for the purpose of avoiding penalties that may be imposed by the IRS. In the event you would like us to perform the type of analysis that is necessary for us to provide an opinion, that does not require the above disclaimer, as always, please feel free to contact us.