Substantiating Charitable Gifts for 2017

Substantiating Charitable Gifts for 2017

A sample letter to donors.
Article posted in Compliance, Income Tax, Regulations on 21 December 2017| comments
audience: National Publication | last updated: 29 December 2017
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By: Conrad Teitell, originally published on WealthManagement.com

Now’s a good time to tell your clients how to substantiate their charitable gifts on their 2017 federal income tax returns, due April 17, 2018.

Strict, detailed and overlapping substantiation requirements must be met for charitable deductions to be allowed. And generally, there’s no second chance if deadlines are missed or requirements aren’t satisfied.

Alert. The Internal Revenue Service points out in IRS Publication 557 (January 2017) —“Tax Exempt Status for Your Organization” that: “The donor is responsible for requesting and obtaining the written acknowledgment from the donee.”

Crucial. When a receipt is required to substantiate a deduction, a donor must have it in his possession by the earlier of the actual filing of the return, or the April 17, 2018 due date for the return (or after an extended due date). It’s wise to alert and inform clients about the substantiation requirements before the end of 2017. Otherwise, a speedy filer may lose the deduction because the return is filed before receiving a receipt from the donee. For example, the donor files his return on Jan. 20, 2018, but doesn’t get the receipt until Jan. 25.

Help is on the way. The following sample letter informs clients of the reporting requirements and deadlines. You have my permission to use this letter and don’t use my name. And, as always, this isn’t my legal, tax, financial or other advice.

Click here for sample letter.

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