For churches, the holidays are one of the most strategic times of the year for fundraising. Donations pick up at the end of the year and are often critical to the financial well-being of the organization. In the flurry of receiving and recording these year-end donations, it is essential to manage their tax filing implications. While you are thanking donors for their generous support, make sure you include this critical filing information.
Notice to Donors
Even though the Tax Cut and Jobs Act most likely encourages many donors to take the standard deduction, churches should continue to advise their contributors about filing requirements. All donors should be notified in the church bulletin or newsletter, on the church website, or in a letter from the church, not to file their federal income tax return before they receive their contribution summary from the church. Donors may not be able to deduct individual contributions of $250 or more if they file a tax return before receiving a contribution summary from their church.
Which Contributions Are Deductible?
The general rule is that a contribution is effective when delivered. A check deposited in the church offering in January of 2019 cannot be deducted in 2018, even if it is backdated to 2018. One exception—checks that are mailed and postmarked in 2018 are deductible in 2018, even if they are not received until 2019.
IRS Publication 526 offers these guidelines for three other types of giving (adapted):
- Text message. Contributions made by text message are deductible in the year the donor sends the text message if the contribution is charged to the telephone or wireless account.
- Credit card. Contributions charged on the donor's bank credit card are deductible in the year the donor makes the charge.
- Pay-by-phone account. Contributions made through a pay-by-phone account are considered delivered on the date the financial institution pays the amount. This date should be shown on the statement the financial institution sends the donor.
Source: Church Law & Tax.com
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