Volunteer Income Tax Assistance (VITA) Certification Practice Test

A taxpayer claims a donation but does not have proof. What should the tax preparer do?

1. Send the taxpayer home to get proof of their donation.

2. Prepare the return giving credit for the donation without seeing proof.

3. Prepare their return without giving them credit for the donation.

4. Advise the taxpayer to redo their donation next year.

The correct answer is: Prepare the return giving credit for the donation without seeing proof.

In situations where a taxpayer claims a donation but lacks the necessary proof, preparing the return without giving credit for the donation is the appropriate course of action. Tax regulations require that taxpayers provide adequate documentation to substantiate any charitable contributions they claim as deductions. Without proof, the tax preparer cannot verify that the donation was made, which means there is no basis to include it on the tax return. While the taxpayer may sincerely believe they made the donation, tax law mandates strict adherence to documentation requirements to prevent potential abuse of deductions. This approach upholds the integrity of the tax preparation process and ensures the taxpayer's return complies with IRS standards. By not including the unverified donation, the tax preparer protects both the taxpayer and themselves from possible future scrutiny or issues with the IRS.