How to Write a Donation Receipt for Tax Purposes

A donation receipt serves as official documentation for contributions to qualified charitable organizations. This document is important for both the organization, which acknowledges the gift, and the donor, who uses it to substantiate deductions on federal income tax returns. Proper documentation ensures compliance with Internal Revenue Service (IRS) regulations.

Essential Elements of a Valid Donation Receipt

A valid donation receipt must include specific details for tax deduction purposes. The receipt needs to clearly state the name of the organization receiving the donation, along with its Employer Identification Number (EIN). This unique nine-digit number identifies the tax-exempt entity. The exact date the contribution was made must be present on the document.

For cash contributions, the precise dollar amount of the donation must be noted. If the contribution was non-cash, a description of the donated property is required, but not its monetary value.

The receipt must also contain a statement indicating whether the donor received any goods or services in exchange. If goods or services were provided, their description and a good-faith estimate of their value must be included; otherwise, a clear declaration that none were provided is necessary. The name of the donor must be clearly identified on the receipt.

Special Considerations for Non-Cash Contributions

Non-cash contributions have specific informational requirements. The organization does not determine or state the fair market value of the non-cash donation on the receipt, as the donor is responsible for determining the value for tax purposes, especially for items exceeding $500. Certain non-cash donations, such as vehicles, boats, or airplanes, have additional stringent rules under IRS Publication 1212. For these items, the organization must include the vehicle identification number (VIN) on the receipt if the claimed value exceeds $500. The receipt must also state whether the organization sold the vehicle without any significant intervening use or if it used the vehicle significantly for its exempt function.

Receipt Issuance and Recordkeeping

After all necessary information is gathered and the receipt content is prepared, the organization must issue the document to the donor. Organizations should provide these receipts by January 31st of the year following the donation. However, a receipt must be provided at the time of the donation if the donor requests it, or if the organization provided goods or services in return for the contribution.

Receipts can be delivered through postal mail or electronic mail. Organizations are required to maintain accurate records of all issued donation receipts. Retaining copies of these acknowledgments is important for the organization’s own compliance and audit purposes.