Couple missionary tax deduction

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rexgj
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Couple missionary tax deduction

Postby rexgj » Sun Oct 11, 2009 10:55 am

I found part of the answer to this question by searching LDS Tech, but questions still remain: In 2006, long before I was here, a daughter contributed to the ward missionary fund for the purpose of assisting her parents who were serving in Australia. As I understand the handbook, the ward may assist couple missionaries through it's ward missionary account.

The poblem here, is the daughter does not have a signed "tax statement" printout from the bishop, she only has the unsigned copy typically provided to members prior to tithing settlement. And she is now being audited by the IRS, who is disallowing this deduction because "it was for a specific person, and is not signed by the bishop."

Is this correctable? Can the current bishop, or prior bishop provide a signed tax statement, or a letter, or something that will allow this daughter to avoid a sizeable tax hit?

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aebrown
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Postby aebrown » Sun Oct 11, 2009 11:22 am

rexgj wrote: Is this correctable? Can the current bishop, or prior bishop provide a signed tax statement, or a letter, or something that will allow this daughter to avoid a sizeable tax hit?


I don't see why it couldn't be corrected. The ward should have issued a signed tax statement back in January 2007, since the daughter did donate to the ward missionary fund. If the ward failed to do so back then, they not only can, but should correct that oversight.

As for the donation being intended for a particular person, that is something that every ward should be very careful about. The question is, would the ward have provided the assistance for the missionary couple, no matter what the daughter contributed. If the answer is yes (and it definitely should be), then it doesn't matter who may have made donations. If the answer is no, then the ward had no business sending money to the missionary couple, and the IRS has a good point.

rexgj
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Postby rexgj » Sun Oct 11, 2009 11:34 am

I mused over the same issues. Parents of a young man missionary donate for him, although it goes into the ward missionary account, and of course the church transfers that money out each month. The same thing was taking place here, the ward was helping the missionary couple, and sending them money each month to supplement their cost, so the daughter donating should be no different than if I donate to the ward for my son on a mission.

So, should the bishop, who was the bishop at the time sign the statement (he is still in the ward), or should the current bishop?

rexgj
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Postby rexgj » Sun Oct 11, 2009 7:34 pm

Ok, it's a simple answer. This woman donated to the ward missionary fund, that's the end of the story. Whether she intended it to go to her parents or not, or whether the bishop actually sent them any money or not, is irrelevant. She gave a legitimate donation to the church missionary fund, and she can deduct that.

I looked up her year end contributions in MLS for 2006, printed out the Tax Statement for her, took it to the prior bishop, he signed it, and the woman can now defend her actions with the IRS.

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Postby lajackson » Sun Oct 11, 2009 7:40 pm

Several different things are at work here.

rexgj wrote:So, should the bishop, who was the bishop at the time sign the statement (he is still in the ward), or should the current bishop?


No one will care. I would print it out, have one of them sign it, and give it to her. The challenge she will have is that, to qualify for the deduction, IRS rules require that she receive the receipt before she files her tax return. Nevertheless, I would print it out, have it signed, and give it to her.

rexgj wrote:The same thing was taking place here, the ward was helping the missionary couple, and sending them money each month to supplement their cost, so the daughter donating should be no different than if I donate to the ward for my son on a mission.


It is different in the eyes of the IRS. An older couple is responsible for their own living expenses and, just because they are serving on a mission, does not make their living expenses tax deductible. As far as the IRS is concerned, there is a big difference.

rexgj wrote:I mused over the same issues. Parents of a young man missionary donate for him, although it goes into the ward missionary account, and of course the church transfers that money out each month.


Technically, parents of a young man, or anyone else, donate to the missionary fund of the Church. The donation is irrevocable.

In a totally separate action, the Church takes care of the needs of young men and women serving in the mission field. The Church has managed to separate these two issues far enough that the IRS is willing to allow a deduction for a contribution to the missionary fund, at least for now, as long as everyone is very careful and follows the rules.

rexgj
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Postby rexgj » Sun Oct 11, 2009 7:50 pm

I agree the donor may have an uphill battle here, but only because she insisted to the IRS that she gave that money specifically for her parents. She will lose that argument, the IRS does not allow it. But if she can simply show her signed, year end donor statement, and can convince the IRS she had no control over where that money went, she might win that one. But the IRS may squint at the change of story at this late date. I'll be interested to see how this turns out.

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Postby lajackson » Sun Oct 11, 2009 7:56 pm

rexgj wrote:I agree the donor may have an uphill battle here, . . .


Yes, and I do not envy her. But, giving her the signed form was the way to go. She will need that, at the very least. And, it may well work for her.


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