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Contribution Rule Change for 2007

Beginning in 2007 the rules are changing just a bit for claiming a deduction for contributions to charities. For example:

  • You normally drop money in the offering plate at church each week and you plan to take a tax deduction for that. Can you prove you made the gift?
  • You purchased some Girl Scout cookies. Great! Now you want to take a deduction for the excess over the value of those cookies. OK, can you prove how much you paid for them?

This is a couple of examples of how this has now changed.

It appears that Congress perceived that there was tax abuse in this area, so they modified the rules. Beginning in 2007, in order to take a tax deduction for a cash contribution under $250, you will need to have some third-party record of that. This could be in the form of a receipt from the tax-exempt organization, or it can be a cancelled check. But your own check register is insufficient.

For cash contributions of $250 or more, you will still need a receipt from the tax-exempt organization. That has not changed.

Planning to give non-cash items? Wonderful! Organizations such as local Rescue Missions and the Salvation Army depend on these. But now, in order to take a tax deduction for the gift, the item must be in good condition unless you obtain a written appraisal for the gift.

If the total of non-cash gifts is over $500, then Form 8283 is still required. This form is used to detail the items, including information about when you aquired the item, how you arrived at the value, etc.

If the value is over $5,000 then a written appraisal is required. And don't forget that there were recent changes relating to donations of automobiles, and that is covered elsewhere.

"Tax software is no substitute for tax knowledge."

Any views expressed herein are based on our best information. The content of this web site was written as general information without specific individual information and thus may not apply in all situations. This material was not written, and cannot be used by the taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer.

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Janelle Ogg, EA
Richard Ogg, EA