As we get closer to another tax return filing season here is a reminder of the documentation and substantiation requirements for a few common deductions.

Charitable Contributions

No deduction for cash donations is allowed unless you have bank records (canceled check or bank statement) or written acknowledgment from the charity documenting the contribution’s amount and date.

Contributions of $250 or more in any one day to any one organization must have written acknowledgment from the charity or they are not deductible. Additionally, you must have the written acknowledgment by the earlier of the date you file your tax return or the tax return’s extended due date.

Noncash donations of clothing and household items should be documented by keeping the following:

  • Receipt showing the name, location, and date of the contribution
  • Reasonably detailed description of the items donated
  • Calculation of fair market value using thrift shop method

If you donated noncash items and the fair value of all items donated exceeds $5,000 you may be required to have an appraisal to support your deduction.

Automobile Expenses and Business Use

The key to properly deducting automobile expenses is meeting the substantiation/documentation requirements required by the Internal Revenue Code.

Taxpayers should maintain the following related to automobile expenses:

  • Documents (receipts, invoices, etc.) supporting the amounts paid for automobile expenses (repairs, gas, oil changes, tires, insurance, property taxes, etc.)
  • Detailed business mileage records. Business mileage records should include where you were went, when you went, and the business purpose for the trip.
  • Documentation of the total miles your vehicle was driven during the year. A few ways this can be documented is by taking pictures of your odometer on January 1st each year or by having repair work done near the end of the year. Most auto repair shops note the vehicle’s odometer reading on their invoice.

Note: These documentation and substantiation requirements also apply if you are claiming a mileage based deduction for any other type of auto mileage (medical, charitable, moving, etc.) on your tax return.