Internal Revenue Code Section 170(f)(8): Donation Rules
To properly claim a charitable deduction for any single gift of $250 or more, taxpayers must meet specific IRS documentation standards for proof of their donation.
Internal Revenue Code Section 170(f)(8) establishes a documentation rule for taxpayers who wish to claim a deduction for charitable contributions. This regulation mandates that a donor must secure specific proof from a charitable organization for any single donation valued at $250 or more. The responsibility for obtaining this documentation rests with the donor. Failing to comply with these substantiation requirements can result in the Internal Revenue Service (IRS) disallowing the deduction for that contribution, even if the donation was genuinely made.
The Written Acknowledgment Requirement
A written acknowledgment from the recipient charity is required for each contribution of $250 or more. This threshold applies to individual payments; multiple donations to the same charity throughout the year are assessed separately. For instance, two separate donations of $200 to one organization do not trigger this rule, but a single $300 donation does. A canceled check is not sufficient to prove a gift of this size.
To be valid, the acknowledgment must contain specific information, including:
- The name of the charitable organization.
- The amount of any cash contributed or a description of the donated property.
- A statement regarding whether the charity provided any goods or services in return for the contribution.
If no benefits were provided, the document must state this. If the donor did receive something of value, the acknowledgment must include a description and a good-faith estimate of its value. The charity is not required to place a value on donated property; that responsibility falls to the donor.
The “Contemporaneous” Timing Rule
The term “contemporaneous” defines the deadline by which a donor must have the written acknowledgment. The rule states the donor must receive the document by the earlier of two dates: the day the taxpayer files their income tax return for the year of the contribution, or the official due date for filing that return, including any approved extensions.
This “earlier of” provision creates a firm cutoff. For example, a taxpayer who makes a donation in November 2024 must have the acknowledgment by the time they file their 2024 return. If this taxpayer files their return on March 10, 2025, they must have the document by that date. Waiting until the April 15 tax deadline would be too late if the return is already filed, and the deduction could be disallowed.
Application to Specific Contribution Types
Payroll Deductions
Substantiating gifts made through payroll deductions requires two documents. The donor must retain a pay stub, Form W-2, or other employer document showing the total amount withheld for charity. The donor must also obtain a document from the charity, such as a pledge card, stating that the organization does not provide goods or services for contributions made through the payroll deduction program.
Non-Cash Contributions
When a taxpayer donates property instead of cash, the acknowledgment rules apply if the item’s value is $250 or more. The charity’s acknowledgment must describe the property but will not assign a monetary value to it, as the donor is responsible for determining the property’s fair market value. For non-cash gifts valued over $500, additional reporting is required on Form 8283, Noncash Charitable Contributions. The acknowledgment letter does not replace the separate substantiation rules for valuing and reporting these larger non-cash donations.
Contributions with a Return Benefit
A quid pro quo contribution is when a donor makes a payment to a charity that is partly a contribution and partly for goods or services. The written acknowledgment must provide a good-faith estimate of the value of the benefits the donor received. The deductible amount is limited to the excess of the contribution over the value of the goods or services provided by the organization.
For example, if a donor pays $300 to attend a charity dinner and the acknowledgment states the meal is valued at $100, the donor can only claim a deduction of $200. For any single payment over $75 that is a quid pro quo contribution, the charity must provide a written statement. This statement informs the donor that their deduction is limited and provides the good-faith estimate of value.