New Tax Rules Apply for Charitable Gifts : Laws: Contributions that are larger than $250 will require more than a canceled check for documentation.

As Americans make their year-end charitable contributions, they will be operating under a new set of rules.

The end of the year is a peak time for contributions, motivated by a mixture of holiday season altruism and tax-planning practicality. For most people, the end of December marks the deadline to increase their deductions, and thereby reduce their tax bill, for the year.

“Although the primary motive of giving is to support a charitable purpose, tax planning plays an important role,” says the accounting firm of Coopers & Lybrand in its booklet Charitable Giving in the 1990s.

This year, a new set of standards for documenting charitable contributions is in effect, having been enacted as part of the 1993 tax and budget bill. The paperwork requirements have been increased, for instance, for any cash contribution of $250 or more. At that level, “a canceled check is no longer sufficient,” notes the Institute of Certified Financial Planners. “Now you must ask the charity for a written acknowledgment of the value of the gift, and that you received no goods or services in return.

“Religious organizations must state that contributors received only ‘intangible religious benefits.’ ”

Many charities and other organizations that receive significant numbers of contributions have responded to the new strictures by automatically providing receipts of this sort. So the burden of extra work on contributors is minimal.

The limit also can be avoided by splitting contributions into separate pieces of less than $250 each.

“If you make payroll deductions of $50 a month to United Way, for example, you don’t need written documentation from them, even though the total gift for the year is $600,” the financial planners’ institute notes.

But if you give property for which you deduct $500 or more, a separate Internal Revenue Service Form 8283 must be submitted to substantiate its value. With property donations above $5,000, you must get a professional appraisal and attach it to your tax return.

Furthermore, if you make a contribution of $75 or more that provides you with something of value in return, such as a meal or tickets to a concert, you need to get a written statement from the charity. This document should estimate the value of the goods or services you receive, which is then subtracted from the amount of your total payment to determine how much you have contributed for tax purposes.

Beyond that, charitable giving continues to be governed by rules that applied in previous years.

“Only individuals who itemize deductions may deduct charitable contributions,” says the accounting firm of Ernst & Young in its “Tax-Savings Strategies Guide 1995.”

If you contribute 20% or more of your gross income, the firm points out, any of several limits on how much you can deduct may apply.

At year end, timing is of the essence in determining whether you can take a deduction for a contribution within a given tax year. If a check is mailed or delivered by Dec. 31, as supported by evidence such as a postmark, it is eligible for deduction in the current year.

Contributions by credit card can be deducted currently, even if you don’t pay off your card balance for months. “If you make a contribution with borrowed funds,” points out Ernst & Young, “a deduction is allowed in the year you make the contribution, regardless of when you repay the loan.”

But the gift must be actually charged to the credit card, not just pledged. No matter what amounts you may promise to pay, a pledged contribution does not become a deductible contribution until you make good on it.