Volunteer Income Tax Assistance (VITA) Certification Practice Test

Is it necessary to see proof of cash donations made by a taxpayer?

1. Yes, always

2. No, if the information seems reasonable

3. Only for cash donations over $250

4. No, unless requested by the IRS

The correct answer is: No, if the information seems reasonable

The most appropriate answer is that it is not necessary to see proof of cash donations made by a taxpayer if the information seems reasonable. In tax preparation, cash donations typically require substantiation, but the level of evidence needed can depend on the amount donated. For smaller amounts, it is often accepted to take the taxpayer's word as credible if the donation appears reasonable. This is particularly relevant for cash donations under $250, where formal documentation may not be mandatory. However, larger donations do necessitate more stringent proof, and the IRS guidelines specify the requirements for substantially larger contributions. Therefore, while evidence of cash donations is always ideal, when it comes to amounts that do not exceed certain thresholds, reasonable assertions can suffice without necessitating documented proof upfront.