Most of us make charitable giving a part of our lives, and we would continuing doing so whether or not the tax code incentivized us to do so.  That said, once we make a charitable gift, we want to be sure to maximize the tax value of the gift.  While it sounds simple - you deduct what you give to charity - there are specific rules that must be followed and certain documentation that must be maintained.

For a contribution of cash, check, or other monetary gift, regardless of amount, you must maintain a bank record or a written  communication from the nonprofit organization showing its name, as well as the date and amount of the contribution. If you make a charitable  contribution by text message, a bill from your cellular provider containing the required  information is acceptable substantiation. Any other type of written  record, such as a log of contributions, is insufficient.

For a contribution of property other than money, you generally must maintain a receipt  from the nonprofit organization that shows the organization's name, the date and location of the contribution, and a detailed description (but not the value) of the property. If circumstances make obtaining a receipt  impracticable, you must maintain a reliable written  record of the contribution. The information required  in such a record depends on factors such as the type and value of property contributed.

Tax regulations require that all charitable contributions must be substantiated.  Depending on the value of the contribution, those requirements can change.  Here's a look at the rules:

• $250 or more - No charitable  deduction is allowed for any contribution of $250 or more unless you substantiate the contribution with a written  receipt  from the donee organization. You must have the receipt  in hand when you file your return (or by the due date, if earlier) or you won't be able to claim the deduction. If you make separate contributions of less than $250, you won't be subject to the written  receipt  requirement, even if your contributions to the same charity  total $250 or more in a year.  The receipt must set forth the amount of cash and a description (but not the value) of any property other than cash contributed. It must also state whether the donee provided any goods or services in return for the contribution, and if so, must give a good-faith estimate of the value of the goods or services.  If you received only “intangible religious benefits,” such as attending religious services, in return for your contribution, the receipt  must say so. This type of benefit is considered to have no commercial value and so doesn't reduce the charitable  deduction available.
• $500 or more - if the deduction you claim for non-cash property is $500 or more, you must attach a completed Form 8283 (Noncash Charitable  Contributions) to your return or the deduction isn't allowed.
• $5,000 or more - you're generally required  to obtain a qualified appraisal and to attach an appraisal summary to the tax return. However, a qualified appraisal isn't required  for publicly traded securities for which market quotations are readily available. A partially completed appraisal summary and the maintenance of certain records are required  for (1) stock that isn't publicly traded and for which claimed deduction is greater than $5,000 and no more than $10,000, and (2) certain publicly traded securities for which market quotations aren't readily available. 

For gifts of art valued at $20,000 or more, you must attach a complete copy of the signed appraisal (rather than an appraisal summary) to your return. IRS may also request that you provide a photograph.  If an item of art has been appraised at $50,000 or more, you can ask IRS to issue a “Statement of Value” which can be used to substantiate the value.

If you receive goods or services, such as a dinner or theater tickets, in return for your contribution, your deduction is limited to the excess of what you gave over the value of what you received. For example, if you gave $100 and in return received a dinner worth $30, you can deduct $70. But your contribution is fully deductible if:

• you received free, unordered items from the charity that cost no more than $11.20 in 2020 ($11.10 in 2019) in total;
• you gave at least $56 in 2020 ($55.50 in 2019) and received only token items (bookmarks, key chains, calendars, etc.) that bear the charity's name or logo and cost no more than $11.20 in 2020 ($11.10 in 2019) in total; or
• the benefits that you received are worth no more than 2% of your contribution and no more than $112 in 2020 ($111 in 2019).

If you made a contribution of more than $75 for which you received goods or services, the charity  must give you a written  statement, either when it asks for the donation or when it receives it, that tells you the value of those goods or services. Be sure to keep these statements.

You can substantiate a contribution that you make by withholding from your wages with a pay stub, Form W-2, or other document from your employer that shows the amount withheld for payment to a charity. You can substantiate a single contribution of $250 or more with a pledge card or other document prepared by the charity  that includes a statement that it doesn't provide goods or services in return for contributions made by payroll deduction.  The deduction from each wage payment is treated as a separate contribution for purposes of the $250 threshold.

Out-of-pocket expenses - Although you can't deduct the value of services you perform for a charitable organization, some deductions are permitted for out-of-pocket costs you incur while performing the services. You should keep track of your expenses, the services you performed and when you performed them, and the organization for which you performed the services. Keep receipts, canceled checks, and other reliable written  records relating to the services and expenses.  As discussed above, a written  receipt  is required  for contributions of $250 or more. This presents a problem for out-of-pocket expenses incurred in the course of providing charitable  services, since the charity  doesn't know how much those expenses were. However, you can satisfy the written  receipt  requirement  if you have adequate records to substantiate the amount of your expenditures, and get a statement from the charity  that contains a description of the services you provided, the date the services were provided, a statement of whether the organization provided any goods or services in return, and a description and good-faith estimate of the value of those goods or services.

Most of us assume that the nonprofit organization fully  understands the documentation requirements, and will provide a donor with the correct paperwork.  While that is generally the case, it is not always true, and a taxpayer should be aware of the above requirements.