Year-End Charitable Giving - What You Need to Know

The tax law encourages charitable giving, as long as the donor meets certain conditions.  Read below to see if you could benefit from any of the following:

Personal Services

The value of personal services is never deductible; however non-reimbursed expenses you incur while performing services for a church or charity may be.  You can use the current standard charity rate per mile to figure a deduction for any miles driven performing service for the church.  The key is maintaining an accurate mileage log, tracking “charity miles.” Mileage Logs can be found at most office supply stores.

Year in Which a Contribution is Deductible

Charitable contributions must be claimed in the year in which they are delivered to the charity.  The only exception to this would be a check that was mailed – you would go by the postmark date, even if the check were received by the charity/church early the following year.  Another important thing to note - credit card donations are deductible in the year charged, even if the payment is made in the following year. However, it is also important to note that any interest paid in respect to such donations is not deductible.

Limits on Deductions

Generally, a deduction for charitable contributions cannot exceed 50 percent of the donor’s adjusted gross income.  Sometimes, a 30 percent rule may apply.  Donors who exceed these limits may be able to deduct excess contributions in future years.

Designated Contributions

Designated contributions are contributions made to specific causes or purposes of a church or charitable organization.  Things that would be legitimate in the case of our church would be the worldwide media ministry or the Abba’s House building fund.  If the project or cause is something that is set-up and administered by the church, it will remain deductible.  However, if the donor’s contribution is too specific, it could potentially be non-deductible.  Contributions that include an individual’s name are rarely deductible, unless there has been a church-wide effort to collect money for that individual.  The real test lies in the administrative control of the funds.  If the gift is general enough so that the church maintains full control over the use and accounting of the money, the contribution is generally deductible.

Substantiation

Contributions of $250 or more require a third party substantiation.  Cancelled checks of $250 or more cannot serve as substantiation for the IRS. As long as you use an offering envelope or give by way of a check, we can track your giving and send you a contribution statement at the end of the year that will satisfy the IRS substantiation rule.  If the gift is valued at $500 or more, other substantiation rules may apply; refer to IRS Form 8283.

Conclusion

There are still many advantages the government gives us for being charitable.  As we celebrate the gift that God gave us through Jesus, may we give with a willing and grateful heart out of the abundance that God has blessed us with!

-Denise Craig, Chief Financial Officer