Understanding Charitable Deductions:Why Keeping Your Receipts Matters for TaxSavings

At AnidjarLaw, we believe that giving back to your community is more than just a kind act, it’s also a smart way to manage your finances. When you donate to charities, you can lower the amount of income you pay taxes on. This helps you save money while supporting important causes. However, as shown in recent court cases like Besaw v. Commissioner (T.C. Summary Opinion 2025-7), not keeping proper records of your donations can lead to problems. You might lose your tax deduction, face an audit from the IRS, or even pay penalties.

In this guide, we’ll explain charitable deductions in simple terms. We’ll cover what they are, why receipts are so important, and how to avoid common mistakes. Whether you’re donating for the first time or have been giving for years, this information will help you make the most of your tax benefits.

For personalized advice on tax planning, estate matters, or other legal needs, visit www.anidjarlaw.com to speak with our experienced team in South Florida.

Donations to charities come in two main types: cash and noncash (also called “in-kind” donations, like giving items instead of money). Knowing the rules for each is key to proving your donations correctly and avoiding issues, like what happened in the Besaw case.

Cash Donations

Cash donations are the simplest kind. This includes money you give by check, credit card, electronic transfer (like PayPal), or even through payroll deductions at work.

• If your donation is less than $250, you just need a basic record, like a bank statement, canceled check, or a simple receipt from the charity.
• For $250 or more, you need a special written note from the charity, called a “contemporaneous acknowledgment.” This must be made at the time of the donation (or soon after) and include:
  • The amount you donated.
  • A statement saying whether you got any goods or services in return (like a dinner ticket). If you did, it should describe them and estimate their value in good faith.
  • The date of the donation.

You must get this acknowledgment before you file your tax return. Even if you have bank records showing the payment, without this note, the IRS might not allow the deduction.

Noncash Donations

Noncash donations are things like clothes, furniture, cars, or stocks. These are trickier because you have to figure out their value. The IRS uses “fair market value” (FMV), which means what the item could sell for right now in its current condition on the open market.

For example, if you donate an old couch worth $200 based on similar sales online, that’s your deduction amount.

• For items worth less than $250, you need a receipt from the charity with the organization’s name, the date and location of the donation, and a description of what you gave (like “men’s winter coat in good condition”).
• If all your noncash donations for the year add up to more than $500, you have to fill out Form 8283 and attach it to your tax return.
• For single items (or groups of similar items) worth over $5,000, you usually need a professional appraisal (an expert’s official value estimate), and the appraiser must sign Form 8283. There are special rules for things like art or cars.

The Besaw v. Commissioner case shows why details matter. In 2019, Mr. Besaw claimed $6,760 in noncash deductions. He had receipts from charities, but they didn’t describe the items donated—they left those parts blank. He tried to fix it later with his own lists, but the Court said that wasn’t enough. The law requires descriptions on the original receipts under Treasury Regulation § 1.170A-13. Even though the Court thought he probably did donate, they disallowed the whole deduction, leading to a $2,626 tax bill (the IRS agreed to abate the penalties associated with late payment and accuracy related penalties).

This case reminds us: Get complete receipts right away, or you risk losing your tax break.

Many people run into trouble with charitable deductions, but you can avoid them with these steps:

• Keep Records Now: Always get receipts or acknowledgments right when you donate. Don’t wait until tax time.
• Understand Values: For noncash items, research fair market value using guides like thrift store price lists or online sales data. The IRS has Publication 526 to help.
• Get Appraisals When Needed: For big items over $5,000, hire a qualified appraiser.
• Track Extra Amounts: If your donations go over the yearly limits, carry them over to next year’s taxes.
• Bunch Your Gifts: Consider giving more in some years and less in others to push your itemized deductions above the standard amount.

At AnidjarLaw, we help clients with tax smart strategies as part of estate planning and asset protection. We work with CPAs to minimize taxes and protect your wealth. If you’re in South Florida and need help reviewing your donations or planning your legacy, contact us at www.anidjarlaw.com or call (954) 900-9871.

This guide is for general information only. Tax rules can be complex and change, so always consult a professional. There are varying degrees of tax and legal assistance available contingent on the circumstances.