Now is a good time to tell your clients how to substantiate their charitable gifts on their 2014 federal income tax returns — due by April 15, 2015.
Strict, detailed and overlapping substantiation requirements must be met for charitable deductions to be allowed. And generally there is no second chance if deadlines are missed or requirements aren’t satisfied.
Alert. The IRS points out in IRS Publication 557 (October 2013) —Tax Exempt Status for Your Organization that: “The donor is responsible for requesting and obtaining the written acknowledgment from the donee.”
Crucial. When a receipt is required to substantiate a deduction, a donor must have it in his or her possession by the earlier of the actual filing of the return, or the April 15, 2015 due date (or extended due date) for the return. It’s wise to alert and inform donors about the substantiation requirements before the end of 2014. Otherwise, a speedy filer may lose the deduction because the return is filed before receiving a receipt from the donee. For example, the donor files her return on January 7, 2015, but doesn’t get the receipt until January 12.
Help is here. The following specimen letter informs client-donors of the reporting requirements and deadlines. You have my permission to adopt (or adapt) the letter.