Tax Reform Impact on Charitable Contribution Deductions

More About | Tax Reform | Risk & Regulatory

The 2017 Tax Cuts and Jobs Act (the Act), Public Law No. 115-97, introduced sweeping changes to the federal tax code. The Act contains considerable modifications, including calculation details for the deduction of charitable contributions on tax returns. The U.S. Treasury Department and the Internal Revenue Service (IRS) published new guidance in the final regulation, implementing provisions of the American Jobs Creation Act of 2004, P.L. 108-357, and the Pension Protection Act of 2006, P.L. 109-280, for the substantiation and reporting requirements for cash and noncash donations from individuals, partnerships and corporations that make charitable contributions to not-for-profit organizations.

Outlined in the guidance, (finalizing regulations proposed in 2008, with modifications) the final regulation updates:

  1. substantiation requirements for noncash contributions of more than $500;
  2. new definitions for “qualified appraisal” and “qualified appraiser,” in accordance to noncash gifts;
  3. substantiation requirements for clothing and household items gifted; and
  4. recordkeeping requirements for all cash contributions.

Cash Contributions

For cash, check, or other monetary gifts, substantiation rules mandate donors of contributions to maintain detailed records of each donation for a tax deduction. The record, either a bank statement or written communication from the donee, must include the date and amount of the donation, and the name of the charity. Substantiation rules requiring contemporaneous written acknowledgement of donations of $250 or more are now supplemented by the aforementioned rules.