YEAR
END REMINDERS ABOUT CHARITABLE DONATIONS
I thought, as we got closer to the
end of the year, that I’d give everyone a list of reminders. I know more and
more people aren’t itemizing, so, for many, charitable donations aren’t tax
deductions, but some may still itemize and some may still have the mindset of
making contributions prior to year-end. So here is a list of information. I
think it might be a good idea to include this in your church newsletters as a
reminder to folks.
1.
Only donations made during 2023 are deductible in 2023. A donation made in
2024 will be deductible in 2024.
2.
What happens if my contribution that I mailed in December
isn’t received by the church until 2024? It all depends on what the postmark is on the
envelope. If the postmark is 2023, it is deductible in 2023, even if the envelope
isn’t received by the church until 2024.
3.
Is the amount I send to the church for a retreat or other
event deductible?
No. Receiving benefits (attendance at a retreat, a dinner, etc.) worth an
amount equal to or greater than the amount you sent in means it is NOT
deductible. Only the amount that exceeds what you received would be deductible.
4. I spend a lot of time volunteering at my church. If they
had to pay someone to do what I do, it would cost a great deal of money. Can I
deduct the value of what I do as a contribution? No. The value
of personal services is never deductible. Only the amount of unreimbursed
expenses that you spent while doing the services (i.e mileage at the charitable
standard rate (14 cents per mile) plus any other out of pocket costs (paper, supplies,
etc.)) As an example, a mission trip might have some unreimbursed travel expenses
that could be deductible as a charitable contribution.
5.
There are IRS limitations on what is a deductible
contribution on a tax return. The amount that can be deducted in any given
year usually cannot exceed 60% of the adjusted gross income of the taxpayer.
6.
What records do I need to keep?
a.
No
cash contributions can be deducted unless you have a cancelled check, bank
statement or credit card statement showing the name of the church, the amount
and date, a receipt (or letter or other communication) from the church, or payroll
deduction records.
b.
For
individual contributions (cash or property) of $250 or more, you will need to
have a contemporaneous written acknowledgement from the church with the
church’s identifying information, a designation of any non-cash contributions and
a statement that “no good or services were received in exchange for this contribution
other than intangible religious benefits.”
c.
For
contributions worth more $500 or more, other rules apply. Noncash items worth
more than $5000 will require a special tax form on the taxpayer’s return (Form
8283). Exceptions may apply.
d.
For
donations of cars, boats or planes, there are special rules.
7.
Other reminders for the treasurer/financial secretary:
a.
Non-cash
donations are not reported on the “normal” giving statements that contain cash
donations. A separate letter by the church acknowledging the non-cash item
received is what should be used instead, i.e. “500 shares of Apple stock were
given on August 1, 2023.” No value specified, and nothing included on the
giving statement.
b.
Qualified
Charitable Distributions (QCD) are also not reported on the normal giving
statement. A letter is sent to the donor (owner of the retirement account), acknowledging
the receipt of the QCD, amount, date, and from whom it was received (i.e.
JPMorgan). A second letter is sent to the company that sent the funds (i.e. JP
Morgan). A contribution made via QCD is not deductible by the giver, because the
retirement distribution is also not recognized as income by the giver. If you
have other question on this, there is an earlier blog that might be helpful.
(Qualified Charitable Distribution – February 8, 2023).
Of course, each person should consult with
their tax professional to get specific questions answered. These are the
general items that pertain to charitable contributions.
If you wish more information on anything
you’ve been reading about, please feel free to contact me at (315) 427-3668 or sranousacctg@twcny.rr.com or susanranous@unyumc.org. I’d be happy to help or answer any questions.