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Fundraisers vs. Tax Statement

Posted: Mon Feb 06, 2017 6:12 am
by drepouille
After Sacrament Meeting yesterday, a sister asked me why the checks she had written for the Scouting and YW fundraisers were not listed on the official tax statement. I explained that contributions to such "Other" accounts were not considered fully tax-deductible, because the donor may receive some service or benefit in exchange for the donation. The $40 she had given the scouts was in exchange for the service of them placing a US flag in her yard for several US holidays. The $10 she had given the YW for camp was in exchange for the dinner the YW served, even though this sister did not attend that dinner.
I told her she could still claim part of her donations as tax deductions, even though the Church did not list them on the official tax statement. It is her responsibility to determine the fair value of the services she received in exchange for her donation. Even then, the IRS only requires that you supply receipts for a portion (I think 90%) of your charitable deductions.

For more information, see
https://www.irs.gov/charities-non-profits/substantiating-charitable-contributions

Re: Fundraisers vs. Tax Statement

Posted: Mon Feb 06, 2017 7:38 am
by lajackson
drepouille wrote:I told her she could still claim part of her donations as tax deductions, even though the Church did not list them on the official tax statement. It is her responsibility to determine the fair value of the services she received in exchange for her donation. Even then, the IRS only requires that you supply receipts for a portion (I think 90%) of your charitable deductions.

For more information, see
https://www.irs.gov/charities-non-profits/substantiating-charitable-contributions

She should consult her tax advisor. In her case, the church is not required to provide her a receipt because the donation is not over $75, but she is still required to have a written record of a donation in any amount. There is no 90% rule. If she has a "bank record" (i.e., cancelled check), that may work. If she paid cash, she needs a statement from the organization, which it is not required to give.

Re: Fundraisers vs. Tax Statement

Posted: Mon Feb 06, 2017 7:55 am
by drepouille
You are probably right. My 90% statement was based upon information I received during a 2007 income tax audit. The auditor told me I was only required to document 90% of my charitable contributions. He may have been mistaken, since the rule may have changed.

A donor may not claim a deduction for any contribution of cash, a check, or other monetary gift made on or after Jan. 1, 2007, unless the donor maintains a record of the contribution in the form of either a bank record (such as a cancelled check) or a written communication from the charity (such as a receipt or a letter) showing the name of the charity, the date of the contribution, and the amount of the contribution.

Re: Fundraisers vs. Tax Statement

Posted: Mon Feb 06, 2017 9:03 am
by drepouille
On August 17, 2006, President Bush signed the Pension and Protection Act of 2006 into law. The Act, aimed at strengthening pension funds, also made sweeping changes to tax laws related to charitable gifts. While most of the Act’s tax incentives are temporary, expiring on December 31, 2007, the Act’s charitable reforms are permanent.

The Act provides that no deduction shall be allowed for any contribution of a cash, check, or other monetary gift unless the donor maintains a record of the contribution (e.g., bank statement, cancelled check, or credit card statement to proving the donation was made) or a written communication from the charitable organization showing the name of the charitable organization, the date of the contribution, and the amount of the contribution. In other words, taxpayers will no longer be able to deduct cash gifts left in grocery store jars or church collection plates or coins dropped in Salvation Army buckets unless the taxpayer can obtain a receipt or other record of the gift. This rule applies regardless of the amount of the contribution. While taxpayers are not required to submit their receipts with their income tax returns, they are required to retain the receipts in order to substantiate their charitable deductions to the Internal Revenue Service in the event of an audit.

Re: Fundraisers vs. Tax Statement

Posted: Mon Feb 06, 2017 10:19 am
by aebrown
drepouille wrote:
On August 17, 2006, President Bush signed...

It would be more helpful if a quotation like that included a link to the original source; then readers could make their own judgment about its applicability to their situation.

But in any case, let's all stop trying to give specific pointers on the US tax code. The appropriate response to any question from a member like this is to:
  • Explain what the Church actually does (in this case, omits any donations to Other:AMFA categories from the Official Tax Statement).
  • Refer them to their personal tax adviser for any further questions.