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Don’t Forget the “Magic Blurb” on Donation Acknowledgements!

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February 13th, 2013

We came across this blog from the Internet and it is a great reminder for all of us that will be getting charity donation acknowledgements between now and when we file your tax return.  In order to claim a charity donation, you must get a written acknowledgement from the charity and retain in your files before you file your tax return.

It is important for this acknowledgement to have the “magic blurb” as follows:

No goods or services were provided in exchange for your donation (or similar wording). 

Without this statement, the IRS, if they audit your return, are allowed to completely deny your charitable donation even if you have a cancelled check and the letter from the charity.  There have been several court cases where the IRS has won and disallowed the donation simply due to the omission of this statement from the charity.

If you get one of these letters this year without this wording, please call the charity and have them reissue it in the proper form and let them know that they need to update their system accordingly.  This simple mistake can be very costly.

Paul Neiffer, CPA

Paul Neiffer

Paul Neiffer is a certified public accountant and business advisor specializing in income taxation, accounting services, and succession planning for farmers and agribusiness processors. Paul is a partner with CliftonLarsonAllen in Yakima, Washington, as well as a regular speaker at national conferences and contributor at agweb.com. Raised on a farm in central Washington, he has been immersed in the ag industry his entire life, including the last 30 years professionally. In fact, Paul drives combine each summer for his cousins and that is what he considers a vacation. Leave a comment for Paul. If you would like to leave a comment for Paul, follow the link above, however, please make sure to include your email address so that he can reply to your comment (your email address will not automatically show up).

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