The images of destruction from Texas, Florida, Puerto Rico and the U.S. Virgin Islands have prompted many a generous soul to pull their phone out and text a donation to the Red Cross and Salvation Army, among others. Texting donations gained popularity after the Haitian earthquake in 2010, when the American Red Cross was able to raise over $32 million in one month through text donations.
As with any charitable contribution – know who you are giving to. That means checking to see if the charity is legitimate. The easiest way to check is through the IRS’s EO Select Check. This list is updated monthly, and has the names of all organizations currently exempt and able to take deductible charitable contributions. The Federal Trade Commission also has information on its website about charitable scams.
Second, if you plan to itemize your deductions and claim a charitable deduction, you’ll need to keep a record of the contribution. For donations of less than $250, the IRS requires a record that clearly identifies the charity, the amount you donated, and your name. The receipt can be a bank record or a written communication from the charity. After the Haitian earthquake, Congress enacted special legislation allowing a phone bill with the donation listed on it to act as substantiation, but this was effective only for a short period of time. Phone bills can no longer be used to substantiate a texted contribution.
For donations of more than $250, the IRS also requires that you obtain a contemporaneous written acknowledgment from the donee with regard to the contribution – a receipt. The receipt must also provide information about whether the charity provided any goods or services in consideration, in whole or in part, for the cash donation; if the charity provided any goods or services other than intangible religious benefits, and a description and good faith estimate of the value of the goods or services; and if the charity provided any intangible religious benefits, a statement saying so. A donation acknowledgment by the charity is considered ‘contemporaneous’ if you receive the acknowledgment on or before the earlier of the date on which you file a return for the year in which the contribution was made; or the due date (including extensions) for filing the return.
If you make several donations to the same charity, you can use a single receipt if it has all of the necessary information on it – the charity’s name, the dates of the contributions, and the amounts of the contributions.
For more information, the IRS publishes “Charitable Contributions” annually and contains almost all the information you will need for making any type of charitable contribution.