New Requirement for Charitable Gifts

A recent addition to the tax law is that, beginning January 1, 2007, any cash contributions to charities that you intend to itemize and deduct on your Schedule A must be substantiated with a receipt.

In other words, you can no longer simply estimate how much you put in the collection plate at church each week, or how much you plugged into the Salvation Army kettle. You need to make these contributions by way of a check, or many institutions will send an annual report of your contributions, assuming that you used an envelope or other instrument to identify yourself and your gifts throughout the year.

I have a feeling that this may have an impact specifically on groups like the Salvation Army, since they depend upon their kettle contributions for a large amount of their annual budget. But since this likely will represent a small amount of each individual’s tax savings, hopefully something will work out and this won’t impact them too much.