Contributions Receipt Rules

South Jackson Community Church

(Pic sent in by Frank Korotney)

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

According to the IRS Pub 1771:

The donor is responsible for obtaining a written acknowledgment from a charity for any single contribution of $250 or more before the donor can claim a charitable contribution on his/her federal income tax return.

However, the IRS does require you as a charity organization to provide a written disclosure to a donor who receives goods or services in exchange for a single payment in excess of $75. Click on the above link to download the complete IRS publication on this matter.

So it is up to your church policy if you send out contribution statements or make them readily available for anyone who requests one.

Requirements for a Contribution Receipt:

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".

A donation statement will satisfy this requirement for churches.

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.

Frequency:

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.

Form:

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.

Report and Value:

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 my book: Church Contributions.

Gifts:

(South Jackson Community Church)

See this page for more love offering guidelines.

Donated Labor and Service:

The IRS does not permit a tax deduction for donated labor or services. However, a donation 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?

Personal Note: I have closed the question and answer portion of my site. With my husband’s illness, my “regular” 40hr a week job, building and maintaining three web sites, and my volunteer work at my church, I am overwhelmed. I had to let something go. My God comes first, my precious husband and children come second, and with my husband being on my insurance at work...it comes third. So that leaves my web sites and the question and answers take a very big portion of my time. So it had to be the first to go.

However, you can look at the submissions in the links below and see if someone has already answered your particular question or maybe you would like to take a minute to comment on one of the questions and comments below. Your opinions and comments are very valuable to me...so thank you in advance for contributing your comments.

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