If you’re like many Americans, you may be receiving letters from your favorite charities acknowledging your 2020 donations. But can you still claim a deduction for the donation on your 2020 income tax return if you haven’t received such a letter? The answer is: It depends.
Requirements for substantiation
In order to support a charitable deduction, you’ll need to comply with IRS substantiation requirements—generally speaking, this will involve obtaining a contemporaneous written acknowledgement from the charity which states the amount of the donation, whether or not you received any goods or services in consideration for it, and the value of these goods or services.
In this context, “contemporaneous” means earlier than:
- The date on which you file your tax return, or
- The extended due date of your tax return
As long as you haven’t filed your 2020 return, it’s not too late to receive substantiation from a charity you donated to last year. You can still contact the charity to request a written acknowledgment.
It’s worth noting that if you made a cash gift of under $250 with a check or credit card, a canceled check, bank statement, or credit card statement is usually sufficient. However, if you received anything in return for your donation, you’re generally required to reduce your deduction by its value. In this case, the charity will still need to provide you a written acknowledgment as described earlier.
CARES Act: A new deduction for non-itemized returns
In general, taxpayers can’t claim a charitable deduction if they don’t itemize their deductions (and claim the standard deduction instead). However, under the CARES Act, individuals who don’t itemize deductions can claim a federal income tax write-off for up to $300 of cash contributions they’ve made to IRS-approved charities. This $300 limit applies to both unmarried taxpayers and married joint-filing couples.
To make this even better, the tax break was extended under the Consolidated Appropriations Act to cover $300 of 2021 cash contributions. Under the new law, the deduction limit for cash contributions made in 2021 is doubled to $600 for married joint-filing couples.
Contact us today for help with 2020 and 2021 deductions
For some donations, there may be additional substantiation requirements—we can help you determine if you have sufficient substantiation for the gifts you hope to deduct on your 2020 tax return, and advise you on the substantiation you’ll need for donations made this year. Contact us today to get started.