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Charitable Contributions

| March 19, 2021

There are a lot of misunderstandings about what qualifies as a tax-deductible charitable contribution. The IRS has strict guidelines as to what deductions are allowed and the documentation that is required to substantiate a charitable contribution.

To start with, a charitable contribution must be made to a qualified charity. It has become more and more common for individuals to make donations to help others through websites like in which people are able to request help when facing financial hardship. Unfortunately, direct donations to individuals do not qualify as charitable contributions as the donation is made directly to an individual in need rather than through a qualified charity as an intermediary for the donation. Only donations that are paid directly to a qualified charity may be deducted for tax purposes

Another requirement for a qualified charitable contribution is that the donor must subtract the value of goods and services that are received in exchange for the donation. This is often an issue when the donor bids on items in a charity auction. In many cases, the amount bid is less than or equal to the fair market value of the item received. Therefore, no tax deduction is allowed even though the payment is made to a qualified charity.

Finally, a record from the charity referencing the amount donated and the date it was received is required to substantiate a charitable tax deduction. Many charities send letters to their donors but in other cases small cash donations may not be recorded in which case the donation does not meet the IRS requirements for a charitable donation.