Charitable Giving: Donor Acknowledgement Letter Requirement 2025 Filing

As the holiday season approaches, many people increase their charitable giving. This generosity benefits communities and causes, but it also comes with important tax rules that donors must follow. The IRS has issued a clear reminder for taxpayers preparing their 2025 tax returns: donors need proper acknowledgment letters for any charitable donations of $250 or more. Without these letters, the IRS can deny the deduction, potentially costing taxpayers thousands of dollars in lost tax benefits.

Understanding these requirements now can help donors avoid surprises when filing next year. This post explains what makes an acknowledgment letter valid, why it matters during the busy giving season, and how donors can prepare to meet IRS rules.

What the IRS Requires for Donor Acknowledgment Letters

For any charitable contribution of $250 or more, the IRS requires a written acknowledgment from the charity before a taxpayer can claim a deduction. This applies to both individual and business donors. The letter must include:

• The charity’s full name

• The exact amount donated or a detailed description of non-cash gifts

• A clear statement about whether the donor received any goods or services in return, including a description and estimated value if applicable

• The date the donation was made

  
  

If any of these elements are missing, the letter is not compliant, and the IRS may disallow the deduction during an audit.

Examples of Compliant Acknowledgment Letters

• A donor gives $500 to a local food bank. The letter states the food bank’s name, confirms the $500 donation, notes no goods or services were received, and includes the donation date.

• A business donates equipment valued at $1,200 to a nonprofit. The letter describes the equipment, states the donation date, and confirms no goods or services were provided in exchange.

  
  

These letters serve as proof for the IRS that the donation qualifies for a tax deduction.

Why This Matters During the Holiday Giving Season

Thanksgiving through December 31 is the peak period for charitable donations. Many donors make gifts during this time to support causes and reduce their tax burden for the year. However, if donors do not receive proper acknowledgment letters, they risk losing the deduction when filing their 2025 returns.

Charities often send acknowledgment letters after the calendar year ends. Donors should confirm when and how these letters will be issued to avoid delays or missing documentation.

Tips for Donors Before Making Holiday Contributions

• Ask the charity upfront how and when they provide acknowledgment letters. Some charities send them immediately, others wait until early the next year.

• Keep all acknowledgment letters in a safe place with your tax records for 2025.

• Request detailed descriptions for non-cash donations to ensure the letter meets IRS standards.

• Be cautious with gifts of $250 or more: without a proper letter, the deduction is not allowed.

  
  

These steps help donors stay organized and prepared for tax season.

What Happens if You Don’t Have a Proper Acknowledgment Letter?

If taxpayers claim a deduction for a donation of $250 or more without a valid acknowledgment letter, the IRS can disallow the deduction. This means:

• The taxpayer may owe more in taxes than expected.

• Penalties and interest could apply if the IRS finds the deduction was claimed improperly.

• The taxpayer loses the tax benefit of their generosity.

  
  

In some cases, taxpayers may receive a notice from the IRS requesting proof of the donation. Without the letter, they must either pay the additional tax or appeal with other evidence, which is often difficult.

How Businesses Should Handle Donor Acknowledgment Letters

Businesses that make charitable contributions must follow the same rules. Proper documentation is essential for:

• Accurate bookkeeping

• Claiming deductions on corporate tax returns

• Avoiding IRS penalties

  
  

Businesses should request acknowledgment letters from charities and keep them with their financial records. This practice supports transparency and compliance.

Final Thoughts on Preparing for 2025 Tax Returns

The IRS’s reminder about donor acknowledgment letters is a timely alert for anyone planning charitable gifts this holiday season. To maximize tax benefits and avoid issues:

• Confirm acknowledgment letter policies with charities before donating.

• Keep all letters organized with your tax documents.

• Understand the specific information the IRS requires in these letters.

  
  

By taking these steps now, donors can focus on the joy of giving without worrying about tax complications later.