Documenting tithed amount/donation; need to keep records under a certain percentage?

February 27, 2012 4:56 PM

What amount of my income can I claim as tithed/donated without having to have receipts or a paper trail?

A coworker told me that you can claim 3% of your income as tithed/donated without having to ever produce receipts or documentation that you've done so, even if audited. Any know if this is true? I'm all for donating, and not having to keep track of receipts and paperwork like this would make it easier. In my state we don't have to fill out a separate return for taxes; we only have to do the federal one.

posted by anonymous to law & government (8 answers total)

No, any monetary gifts must be documented (from the IRS tax topic):

For a contribution of cash, check, or other monetary gift (regardless of amount), you must maintain as a record of the contribution a bank record or a written communication from the qualified organization containing the name of the organization, the date of the contribution, and the amount of the contribution.
posted by MoonOrb at 5:00 PM on February 27, 2012

If you regularly tithe/donate, most organizations will send you a year end statement, so the paper trail work is done for you.
posted by dpx.mfx at 5:02 PM on February 27, 2012

My account who worked previously for the IRS for several decades told me to keep the tithe/donation number under $500 regardless of how much was actually spent. His experience supposedly was that a higher number could be a contributing factor to the "audit this return" algorithm. He has never asked us to keep receipts for these under $500 per year contributions, though that doesn't mean that there isn't a need to, just that he has never told us to or asked about it.
posted by Rapunzel1111 at 5:07 PM on February 27, 2012

Up until a few years ago, you were allowed to claim a few hundred (I seem to recall it was $300, but it might have been $500) without receipts, but they changed that law: nowadays you have to have receipts for any and all charitable donations you claim.

The limit was never '3% of your income", so I'd be really careful about any tax/financial advice received from this coworker!
posted by easily confused at 5:13 PM on February 27, 2012

Here's the real deal, which I've been using for about 20 years, and I've never been audited. I keep any individual contribution to a charity under $250, which is the limit for not being required to keep receipts. And the contributions can add up to any amount within reason, per charity, or in total. Most years, one charity gets about 10% of my income, with the rest adding up to a fraction of that.

IANAL, IANAA. Don't use this info to try to "get away with" anything ou shouldn't. Also, be aware that for all we know, they track your patterns of giving and might flag anything that doesn't fit your profile. In other words, if suddenly one year you are giving tons, with no prior history of significant charitable contributions... well, I don't know, and I hope not, but BIG BROTHER MAY BE WATCHING.
posted by markhu at 7:10 PM on February 27, 2012

I just did my taxes this weekend, so I still have this sitting around— according to the IRS instructions for form 1040 schedule A, page A-8:

Gifts of $250 or more. You can deduct a gift of $250 or more only if you have a statement from the charitable organization showing the information in (1) and (2) next. […] In figuring whether a gift is $250 or more, do not combine separate donations. For example, if you gave your church $25 each week for a total of $1,300, treat each $25 payment as a separate gift. [....]

Limit on the amount you can deduct. See Pub. 526 to figure the amount of your deduction if any of the following applies.

1. Your cash contributions or contributions of ordinary income property are more than 30% of the amount on Form 1040, line 38.
2. Your gifts of capital gain property are more than 20% of the amount on Form 1040, line 38.

[....]

posted by hattifattener at 7:24 PM on February 27, 2012

Hmmm, however, on the next column it continues:

Recordkeeping. For any contribution made in cash, regardless of the amount, you must maintain as a record of the contribution a bank record (such as a canceled check or credit card statement) or a written record from the charity. The written record must include the name of the charity, date, and amount of the contribution.

So it looks like the $250 limit only applies to the extra recordkeeping info (needing a statement from the charity that you didn't get anything in return, etc).

A glance at page 18 of Pub. 526 reinforces this impression— you need records "regardless of amount". (On the other hand, canceled checks and credit card statements are sufficient for small donations.) That publication is probably what you should consult. Or, y'know, an actual tax expert type person, which I am not.
posted by hattifattener at 7:42 PM on February 27, 2012

You're supposed to save all receipts (although many charitable orgs will send receipts in the mail, and for small donations it sounds like a credit card statement is sufficient, so it shouldn't be too onerous). Your co-worker might have been thinking of the standard deduction?
posted by Lady Li at 10:13 PM on February 27, 2012