To Save Clients a Tax Audit, Consider $249.99 Charitable Gifts

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Tax season is upon us once again, which means it’s time to start working on compiling all those annual tax documents for clients, such as 1099-Rs, 1099-DIVs, 1099-INTs and others. As you and your clients begin preparing for the 2012 tax filing season, I recommend discussing what I believe is a strategy that is vitally important for all taxpayers to know, as it just might save your clients some money should a tax audit ever come their way. It’s important to note that any charitable contribution of cash for $250 or more to a qualified organization requires specific documentation for the deductibility to be legal. These points of discussion come directly from the IRS tax code publication 526.

1) Cash contributions less than $250 require one of the following to be legally deductible:

a) Bank record showing the name of the qualified organization, date and amount including:

              i.      Canceled check

              ii.      Bank or credit union statement 

              iii.      Credit card statement
 

b)  A receipt from the qualified organization

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