Uncle Sam makes it harder to give to charity in 2006

By: Michael S Schmidt

Charity donations 2006 rulings are more stringent than those that were able to be used for your prior tax return. Clothing and other appliances or home items that are donated after 8/17/06 will have to be in good used condition or even better condition to qualify as charitable donations. If the taxpayer will include a verifiable and actual appraisal of any one item from the home, they can claim a deduction of more than $500 on their 2006 tax return. Items that qualify for donations include clothing, furnishings, and articles of furniture, electronic items, electrical appliances, and household linens.

Beginning in the 2006 tax year individuals will now be required to fully document all of the cash contributions they provide to charities. There are new regulations to be considered for voluntary contributions of any amount that you plan to include on a 2006 tax form. Taxpayers will need to document each of their cash donations separately and cannot combine them to try to qualify for a larger 2006 tax refund. This means that if you donate $200 dollars in cash every two weeks the donations must qualify for the under $250 rules every time, you cannot combine the amounts and consider them as a $500 monthly or $6000 annual contribution.

Cash Contributions that are Less than $250

If taxpayers have cash contributions that are each less than $250, they must also have one of the following documentations if you plan to claim them on your 2006 taxes.

• A check that is canceled shows the amount or a clear and accurate statement that is able to provide a verified check number with the amount of the contribution, the date of the contribution and the charity that received the money.

• Receipt from a qualified charity with their name, date of the cash donation, and the cash amount that was received.

• Another written and verifiable statement with the above information.

Cash Contributions that are more than $250

If there are cash contributions from a taxpayer that are more than $250, an acknowledgment of this contribution must be obtained from the qualified organization. You will need these statements even if you are filing your 2006 tax online. This must be a written statement that meets the following requirements:

• Any cash donation must be documented, personal records and miscellaneous credit card statements are no longer sufficient for this purpose.

• The statement must certify if you received goods or services in exchange for your contribution.

• If there was an exchange there must be a good faith estimation concerning the real value of these items.

• The statement must be received on or before the date that the taxpayer is going to file a return. The contribution must be completed by this date, including any filing extension. This means that if you are filing a late 2006 tax return you must be sure to have your charitable contributions completed well in advance of this date.