How to Keep Tax Records for Charity

If you are able to itemize your deductions on your federal income tax return then you will need to keep records of your charitable contributions each year for tax time. If you cannot itemize on your federal income tax return, but use the standard deduction then you may not need to keep records, unless your state offers incentives. If your state of residence offers partial refund incentives for donations made to public institutions, community foundations, homeless shelters, food banks, or similar programs then you still need to keep records for your state income tax return. If you own a computer with a spreadsheet program you can easily keep a running total of contributions. Don’t despair if you do not have a computer, you can write the information down in a spiral notebook and add your numbers with a calculator.

Difficulty: Moderate

Instructions

Things You'll Need:

• A Checkbook, receipts, internet transaction record
• A pen or pencil
• A spiral notebook or ledger
• A calculator
• A large envelope 8 1/2"X11"
• Optional – computer
• Optional – spreadsheet program such as Excel, Lotus, or Microsoft Works
• If you choose the optional method, you do not need the calculator or notebook

1. 
   Use Checks for contributions

   You should use a checkbook or other traceable method to make charitable contributions so you have a physical record. If you are unable to use a traceable method such as by check, credit card, or electronic funds transfer (ETF), then be sure to request a receipt for each contribution.

2. 
   Manual charity record

   If you are using a manual tracking method, such as a notebook, then you need to draw four columns on the first few pages. I recommend that you set up one page in your notebook for each charity that you contribute to financially. If you do not have a filing system, then you should use a notebook that has a built in pocket or envelope. Place all of your receipts and proofs of contributions inside. Write titles at the top of each column. The first column is the date of contribution, second is the check or receipt number, third is the amount, and the fourth is the name of the charity.

3. 
   Excel spreadsheet of contributions

   If you are using a spreadsheet, the columns are already there. Just write a title at the top of each column. If you know how to format lines, your information will look nicer when you print it out, but the lines do not affect your data and therefore, are not necessary. Your titles need to include the date of contribution, check, or receipt number, the amount of the contribution, and the name of the charity. I recommend you set up separate areas or pages for each charity.

4. Each time you make a donation write the information in each column of your notebook. Remember to put one charity on each page. This will make the separate totals easier to add up at the end of the year. You need them separate because some items are eligible for state incentives. If using a spreadsheet, you type each contribution in the designated column. When you or your tax preparer enter contributions into an electronic tax filing system, the totals by the organizations name are needed.

5. 
   Schedule A

   At the end of the year, you will total up your contributions by organization. Either enter the information onto your Schedule A-Itemized Deductions under Gifts to Charity, or give the information to your tax preparer. Allow several rows for data entry if using a spreadsheet, 12 if you give monthly, 52 if you give weekly. You should be able to use the auto sum option (looks like a backwards E) to place a formula in the total cell. Print out the spreadsheet at the end of the year.

Tips & Warnings

• If you gave items instead of money, then you need an itemized list of the items on the signed receipt, with the estimated value of each item. The IRS has a list available with the suggested value of certain items donated.
• In 2006, the IRS published "Charitable Contributions Substantiation and Disclosure Requirements." This document makes it clear that the IRS will not accept just your printed record of contributions. You must have receipts, canceled checks, paycheck stubs, credit card statements, or other physical evidence of a contribution. For contributions over $250, you must have a written acknowledgement, not just a canceled check.

Resources

• Charitable Contributions Substantiation and Disclosure Requirements

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