Deductions for charity require 'proper' records

WASHINGTON — When they passed the collection plate in church or collected donations on your doorstep, you should've put in a check.

Ditto for those bell-ringers outside the grocery store, sidewalk Santas and the kid who came to your door raising money for a school band trip.

If you just gave cash — and didn't get a detailed written receipt — you are out of luck trying to deduct those contributions on your 2007 taxes.

Tighter record-keeping requirements for smaller cash contributions went into effect in 2007, completing major changes in charitable-contribution deduction rules that began with the 2006 tax year.

Cash donations must be backed up by "proper" records, such as a check, bank copy of the check, electronic funds transfer record, credit-card or credit-union statement, payroll stub or W-2 in the case of a payroll deduction. These must show the name of the charity, donation amount, and the date paid or transaction posting date. A written acknowledgment from the charity showing that information also will suffice.

Previously, for amounts under $250, a taxpayer's notes or personal check register reflecting the donations was sufficient. Now, those smaller contributions must be documented with authoritative records.

"People who were throwing cash into the collection plate at churches, unless they get a receipt, they're not going to be able to take a deduction," said Jeff Schnepper, MSN.com's "Money Central" tax expert and author of books on finance and taxation. "Instead of throwing in $10 cash, throw in a $10 check."

Check to see whether a church or charity offers automatic electronic funds transfer or credit- and debit-card payments as a way of satisfying the new documentation requirement. The Church of Jesus Christ of Latter-day Saints offers those options mainly for people who want to donate large sums of money, said Scott Trotter, a church spokesman. People who would like to do that should contact the finance department at church headquarters for instructions.

For your tax deductions, you don't have to provide your check or other documentation to the Internal Revenue Service, just keep it on hand in case you're audited. And if the charity doesn't cash your check until 2008, it's still OK to include it as a 2007 contribution, as long as you mailed the check in 2007.

Only taxpayers who itemize can take the charitable-contribution deduction. Here are other rules for charitable contributions: