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IRS Can Easily Audit Charitable Contributions

Charitable contributions can be tax deductible, but you must have the proper records to support your deduction. Due to the Pension Protection Act of 2006 the rules on recordkeeping for charitable contributions became a little more strict beginning in January 2007. For 2007 and later years, generally all cash and non-cash contributions require verification.

Under the new substantiation rule, the IRS can easily audit charitable contributions. If you don’t have appropriate records, your contribution deductions will be disallowed.

To deduct a charitable cash donation, regardless of the amount, you must have a bank record or a written communication from the charity showing the name of the charity and the date and amount of the contribution. Acceptable bank records would include canceled checks or bank or credit union statements containing the name of the charity, the date and the amount of the contribution.

To deduct a non-cash donation, you must receive and keep a receipt from the charity. The required information is slightly different, depending on the amount of deduction:

Deduction amount	Less than $250
Document needed	Receipt from charity
Information includes	Name of charity; Date and location of contribution; Description of property donated

Deduction amount	$250 up to $500
Document needed	Acknowledgment from charity
Information includes	Name of charity; Date and location of contribution; Description of property donated; Whether any goods or services rendered by the charity and those value if any

Deduction amount	$501 up to $5,000
Document needed	Acknowledgment from charity
Information includes	Name of charity; Date and location of contribution; Description of property donated; Whether any goods or services rendered by the charity and those value if any
Additional records	How the property was obtained; Date the property was obtained; Cost of the property; Form 8283

Deduction amount	More than $5,000
Document needed	Acknowledgment from charity
Information includes	Name of charity; Date and location of contribution; Description of property donated; Whether any goods or services rendered by the charity and those value if any
Additional records	How the property was obtained; Date the property was obtained; Cost of the property; Form 8283; Qualified written appraisal (Appraisal fee can be claimed as miscellaneous deductions on Sch. A)

First-Time Homebuyer Credit

Tax Year	2008
Credit percentage	10% of purchase price
Max credit	$7,500
Date of purchase	Apr. 9, 2008 through Dec. 31, 2008
Tax return	2008 return
15-year payback	Required
Income phase-out	$75,000 - $95,000 (single) $150,000 - $170,000 (joint)
Eligible homebuyer	Had no interest in a primary residence for 3 years prior to the purchase
Note	If you are married, both you and your spouse must be eligible as the first-time homebuyers.

Tax Year	2009 (until Nov. 6)
Credit percentage	10% of purchase price
Max credit	$8,000
Date of purchase	Jan. 1, 2009 through Nov. 6, 2009
Tax return	2008 or 2009 return
15-year payback	No
Income phase-out	$75,000 - $95,000 (single) $150,000 - $170,000 (joint)
Eligible homebuyer	Had no interest in a primary residence for 3 years prior to the purchase
Note	If you are married, both you and your spouse must be eligible as the first-time homebuyers.

Tax Year	Nov. 7, 2009 - Apr. 30, 2010
Credit percentage	10% of purchase price
Max credit	$8,000
Date of purchase	Nov. 7, 2009 through Apr. 30, 2010
Tax return	2009 return; 2009 or 2010 return if purchased in 2010
15-year payback	No
Income phase-out	$125,000 - $145,000 (single) $225,000 - $245,000 (joint)
Eligible homebuyer	Had no interest in a primary residence for 3 years prior to the purchase
Note	Dependents are not eligible; Price of home must be up to $800,000; A purchaser must be at least 18 yrs old; If you are married, both you and your spouse must be eligible as the first-time homebuyers.

Long-Time Resident Credit

The new law, Workers, Homeownership, and Business Assistance Act of 2009, authorizes the credit for long-time homowners buying a replacement pricipal residence.

Tax Year	Nov. 7, 2009 - Apr. 30, 2010
Credit percentage	10% of purchase price
Max credit	$6,500
Date of purchase	Nov. 7, 2009 through Apr. 30, 2010
Tax return	2009 return; 2009 or 2010 return if purchased in 2010
Income phase-out	$125,000 - $145,000 (single) $225,000 - $245,000 (joint)
Eligible homebuyer	Have owned and used the same home as a principal or primary residence for at least 5 consecutive years of the 8-year period ending on the date of purchase of a new home as a primary residence
Note	Dependents are not eligible; Price of home must be up to $800,000; A purchaser must be at least 18 yrs old If you are married, both you and your spouse must be eligible for this credit; You don't need to sell your current home to qualify for this credit.