Did you have that familiar impulse to make charitable donations in December so you could take a tax deduction for them on your 2019 tax return? Perhaps appeal letters from charitable organizations still arrive by mail or email near the end of the year.
But the deductibility of charitable gifts changed significantly two years ago when the Tax Cuts and Jobs Act of 2017 (TCJA) took effect, and many taxpayers are finding that their generosity no longer results in a tax break.
Do you itemize?
The (TCJA didn’t put new limits on or suspend the charitable deduction, like it did with many other itemized deductions. Nevertheless, it reduces or eliminates the tax benefits of charitable giving for many taxpayers.
In order to take the tax deduction for charitable donations, you must itemize your deductions. But itemizing saves tax only if itemized deductions exceed the standard deduction.
Through 2025, the TCJA significantly increases the standard deduction. For 2020, it is $24,800 for married couples filing jointly (up from $24,400 for 2019), $18,650 for heads of households (up from $18,350 for 2019), and $12,400 for singles and married couples filing separately (up from $12,200 for 2019).
Before the TCJA was passed, these amounts were $12,700, $9,350, $6,350 respectively. The much higher standard deduction combined with limits or suspensions on some common itemized deductions means you may no longer have enough itemized deductions to exceed the standard deduction. And if that’s the case, your charitable donations won’t save you any tax.
To find out if you get a tax break for your charitable giving, add up potential itemized deductions for the year. If the total is less than your standard deduction, your charitable donations won’t provide a tax benefit.
How can you take the deduction?
Some taxpayers are preserving their charitable deductions by “bunching” donations into alternating years. This can allow you to exceed the standard deduction and claim a charitable deduction (and other itemized deductions) every other year.
If you regularly make similar amounts of donations to charitable organizations every year, bunching may be a strategy to consider. If you delay this year’s donations until next year, and double up the donations at that time, your bunched donations may push you over the line and help you get that charitable giving deduction.
What is the donation deadline?
To be deductible on your 2019 return, a charitable gift must have been made by December 31, 2019. According to the IRS, a donation generally is “made” at the time of its “unconditional delivery.” The delivery date depends in part on what you donate and how you donate it. For example, for a check, the delivery date is the date you mailed it. For a credit card donation, it’s the date you make the charge.
Other requirements
If you do meet the rules for itemizing, there are still other requirements. To be deductible, a donation must be made to a “qualified charity” — one that’s eligible to receive tax-deductible contributions.
And there are substantiation rules to prove you made a charitable gift. For a contribution of cash, check, or other monetary gift, regardless of amount, you must maintain a bank record or a written communication from the organization you donate to that shows its name, plus the date and amount of the contribution. If you make a charitable contribution by text message, a bill from your cell provider containing the required information is an acceptable substantiation. Any other type of written record, such as a log of contributions, isn’t sufficient.
Questions?
Please contact us with any questions you may have about the deductibility of charitable gifts or changes to the standard deduction and itemized deductions.
