Understanding Tax Deductible Contributions

Thank you for your ongoing support of Temple Beth El. We deeply appreciate your generosity and commitment to our community.

Recently, some of you have asked why our Annual Tax Statement distinguishes between payments that are tax deductible and those that are not. This blog post aims to clarify this and provide you with a better understanding of the IRS requirements that we follow.

What is a Contemporaneous Written Acknowledgment?

According to IRS regulations, a donor cannot claim a federal income tax deduction for any single contribution valued at $250 or more unless the donor obtains a contemporaneous written acknowledgment from the charitable organization. This acknowledgment must be obtained by the donor no later than the date the donor files their tax return for the year the contribution is made. The acknowledgment must state whether we provided any goods or services in consideration for the contribution. If goods or services were provided, the acknowledgment must include a good faith estimate of their value.

Distinguishing Deductible Items

It is also important to distinguish between items that qualify for deduction and those that do not. For instance, if a donor makes what the IRS describes as “a quid pro quo contribution” (a payment made partly as a contribution and partly for goods or services provided by the charity), the deductible amount is limited to the excess of the contribution over the value of the goods or services received. For example, if you donate $100 and receive a concert ticket valued at $40, the deductible portion of your contribution is $60.

Ensuring Proper Documentation

We appreciate your understanding and cooperation in this matter. By adhering to these guidelines, we can ensure that your contributions are properly documented and that you can claim the appropriate deductions on your federal income tax return. Next year, we will include this information as most people may not be aware of the IRS requirements.

Thank you once again for your generosity and support. If you have any questions or need further clarification, please do not hesitate to contact us.

As always, when planning your charitable contributions, we encourage you to consult with your tax advisor or legal counsel to understand the potential tax benefits and implications of your donation.

Temple Beth El does not provide tax, legal, or accounting advice. This material has been prepared for informational purposes only and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice.

You should consult your own tax, legal, and accounting advisors before engaging in any transaction.