Don’t Forget the “Magic Blurb” on Donation Acknowledgements!

We came across this blog from the Internet and it is a great reminder for all of us that will be getting charity donation acknowledgements between now and when we file your tax return.  In order to claim a charity donation, you must get a written acknowledgement from the charity and retain in your files before you file your tax return.

It is important for this acknowledgement to have the “magic blurb” as follows:

No goods or services were provided in exchange for your donation (or similar wording). 

Without this statement, the IRS, if they audit your return, are allowed to completely deny your charitable donation even if you have a cancelled check and the letter from the charity.  There have been several court cases where the IRS has won and disallowed the donation simply due to the omission of this statement from the charity.

If you get one of these letters this year without this wording, please call the charity and have them reissue it in the proper form and let them know that they need to update their system accordingly.  This simple mistake can be very costly.

Paul Neiffer, CPA