Contributions Receipts and Annual Contribution Statements

Contributions receipt rules have changed! Since the 2007 tax year, a donor may only deduct a donation by cash or check if they have a receipt or bank record of the donation.

Now all donations must have proof of the deductions. As stated above that proof may be either a bank record or receipt.

A bank record for this record-keeping requirement include bank or credit union statements, canceled checks, or credit card statements.

They must show the date paid or posted, the name of the charity, and the amount of the payment.

Donors will not be allowed a tax deduction for any individual cash (or property) contribution of $250 or more unless they receive a written acknowledgment from the church or nonprofit.

The receipt must include the Church's or Nonprofit's name, the donor's name, the date(s) of the donation(s), and the amount(s).

It must also contain a statement explaining whether the charity provided any goods or services to the donor for the donation. If no goods or services were provided, you would include wording such as: "You did not receive any goods or services in connection with these contributions other than intangible religious benefits".

You should send your donors a receipt no later than the due date of their tax returns.

However, if you are issuing receipts on an annual basis, you should try and get them to your donors by at least January 31st each year and earlier in January if possible. This will assist your donors in gathering necessary data for their tax preparations.

Your donation receipts or acknowledgments can be issued gift-by-gift, monthly, quarterly, annually, or any other frequency. This is up to your organization. If you have a policy and procedure manual, the frequency should be recorded there.

There is no specific design of the receipt required...EXCEPT for form 1098-C, used for gifts of autos, boats, or airplanes.

The receipt can be a letter, postcard, or a computer-generated form. It does not have to include the donor’s social security number or other taxpayer identification number...but it must include the required information listed above.

A receipt can also be provided electronically, such as via an email addressed to the donor.

A written receipt should be issued for all non-cash donations. Usually, your organization is not responsible for establishing the value of the non-cash items and should not include any value on the receipt.

Click here for an example of a noncash donation receipt.

However, a new tax law adopted in 2004 requires extra documentation from your organization for donations of qualified vehicles (including automobiles, boats, and airplanes.

For detailed instructions...look on the IRS website or purchase the my book: Church Contributions.

The IRS does not permit a tax deduction for donated labor or services. However, a contribution receipt may be issued for donated materials and other out-of-pocket expenses.

Say...a repairman voluntarily came and fixed your church's air conditioner. He usually charges $75 per hour for his labor and he spent $50 for parts.

You can issue him a receipt for the parts; however, his labor is a generous non-deductible gift to the church. Also, he can deduct his mileage to the church and back if he itemizes on his personal taxes.

Un-reimbursed expenses that volunteers incur while performing their volunteer services can generally be deducted from their personal tax return.

The letter should not include the value of the volunteer's expenses. The burden is upon the volunteer to prove their expenses.

In summary, keeping accurate records of contributions is imperative for your organization as they are the life blood of your organization.

Whether you use donation tracking software, spreadsheets, or paper...understanding when to issue receipts and when not to, is knowledge every finance person in your church should have.

The book: Charitable Contributions will take you step-by-step through the strict guidelines for donations of automobiles, boats, and planes...and what you must give your donors for donations of property over $500.

Do you know the the IRS mandates for contributions collected at church events such as: bazaars, banquets, actions, etc?

Handling and acknowledging contributions are one of the most important financial duties of your church or nonprofit.

Do you have a question or comment regarding contributions? Take a moment to submit your question or comment below. It is quick and easy. There is no registration or login.

Also, please look at the submissions below this form and see if someone has already answered your particular question or maybe you would like to a minute to comment on one of the questions and comments below.

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With all of the doctor appointments, my regular 40 hour a week job, and trying to keep up with the housework, meals, etc....I just do not have time to try to answer every question immediately.

So...I am going to post your questions and comments daily (without trying to answer each one myself). I found out while my husband was in the hospital that there are some wonderful people out there that are more than willing to help out answer questions and comments. Some of them are even smarter than me :-)

If by the weekend--when things slow down a little for me--I see that there are any questions or comments not answered, I will try to answer them to the best of my ability.

We are all facing a lot of the same issues and need each other..so help and be helped here:

Contributions Questions and Comments

Do you have a question or comment regarding contributions or love offerings? Share it!

Click below to see contributions from other visitors to this page...

(Click on the read or post comment on the bottom of the question to see the answers and/or add your own comments or answers!)

Gifts smaller than $250
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Answer

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Answer

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Answer

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Answer

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Contributions Receipt Rules

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