Reporting Gifts to the Church for IRS Purposes
Generally taxpayers who itemize may deduct contributions of money or property made to charitable organizations. The Revenue Reconciliation Act of 1993 has changed the way donors can substantiate their donation. Prior to 1993, all a donor needed to support a deduction was a canceled check. For contributions made after December 31, 1993, the following new rules apply.
Substantiation of single contributions of $250 or more
Any single contribution of $250 or more can no longer be substantiated by a canceled check. Donors will not be allowed a tax deduction for an individual contribution (cash or property) of $250 or more unless they receive a written acknowledgment from the charitable organization that satisfies the following requirements:
- The receipt is in writing
- The receipt identifies the donor by name
- For donations of property, the receipt describes the property but does not state a value of the property
- The receipt shows separately each individual contribution of $250 or more
- The receipt states whether or not the charitable organization provided any goods or services to the donor in exchange for the donation, and if so, the receipt includes an estimate of the value of those goods and services
If the charitable organization provides no goods or services to the donor in exchange for a contribution, or if the only goods or services the organization provides are "intangible religious benefits," then the receipt must contain a statement to that effect. An appropriate statement would be "No goods or services were provided to you by the church in connection with any contribution, or their value was insignificant or consisted entirely of intangible religious benefits."
- The receipt must be received by the donor on or before the date the donor files a tax return claiming the deduction
"Quid pro quo" contributions of more than $75
A quid pro quo contribution is one that is a payment that is partly a contribution and partly a payment for goods or services received in exchange for the contribution. For every quid pro quo payment the charitable organization receives it must provide a written statement to the donor that satisfies the following conditions:
- The statement informs the donor that the amount of the payment that is tax-deductible is limited to the excess of the contribution over the value of any goods or services provided by the charitable organization
- The statement provides the donor with an estimate of the value of goods or services furnished by the charitable organization.
Gifts for Special Projects
- Gifts for designated or special projects are deductible if the governance authority approves those special projects before you issue the tax-deductible receipt. Gifts for the support, work, or outfit of a BIC missionary are also deductible. Gifts for the support of participants in a summer mission project or other special effort of the church are usually tax-deductible.
There is some question as to whether gifts from parents for their own children in these programs are tax-deductible. If the parents generally support other youth in the church, if their support is only a portion of the total given, or the church maintains control over the funds and disburses them for appropriate ministry costs, you can issue a tax-deductible receipt. However, the IRS will probably challenge the church’s approval of a special project if it is based on the specific request of the just one donor.
For further information on substantiation requirements please contact your local Internal Revenue Service office.