Receipt Rule Specific for Charitable Donation Deductions

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It's that time of year for you to get ready to file your taxes, but if you're counting on a charitable deduction there's an important rule you need to know.

At the Salvation Army Thrift Store many people make donations all year long, but staff there say there's an increase in giving in the final months.

"People are wanting to get their gifts in just before the end of the year so they can maximize their tax deduction and we send out mailings specifically reminding people of that," said Salvation Army Captain Dave Mowers.

If the non-profit organization does not use the words, "no goods or services were received in exchange for this donation," you could be out of luck when claiming a deduction on your taxes for any donation over $250.

"We always include some wording on the receipt that we send out that indicate that the donation was given not in exchange for any type of goods or services," said Mowers.

While many people aren't aware of the specific wording, accountants say most non-profits are aware of the rule.

"The charitable organizations are usually pretty good about getting them a receipt that shows what percentage or certain dollar amount is actually a deductible amount," said Stacey Stocker with H&R Block.

While some portions of tax laws have gray areas accountants say the receipt rule is black and white.

"The IRS is getting pretty specific with those charitable donations that we do and they want to be sure that if you are donating, it's a valid donation," said Stocker.

Stocker says another thing to keep in mind, you must have the proper receipt before you file you tax return.

"Because once you file your tax return the IRS does not allow you to go back and get receipts later on," said Stocker.