Common Charitable Giving Questions and Answers
Q: If I make a contribution in early January Year “B”, can I claim it on my Year “A” taxes?
A: No, Charitable contributions must be claimed in the year in which they are delivered.
Example: Mary writes a check to her church on December 31, Year A, and deposits it in the church offering on Sunday, January 2, Year B. Her check is not deductible on her Year A taxes. She can claim it on her Year B tax return.
Q: If I mail my contribution in December Year A, but it doesn’t reach my church until January Year B, for which year should I claim it?
A: On your Year A tax return. A check that is mailed to a charity is deductible in the year the check is mailed (and postmarked), even if it is received early in the next year.
Example: Mary mails (and postmarks) her check in December Year A. Her church doesn’t receive the check until January Year B. The check is deductible on Mary’s Year A tax return.
Q: Can I deduct the value of volunteer work I did for the church?
A: No. The value of personal services is never deductible as a charitable contribution. However, unreimbursed expenses you incur in performing services on behalf of a church or other charity may be. For 2014, you can use a “standard mileage rate” of 14 cents to compute a deduction for any miles you drive in performing services for your church. Be sure to maintain accurate records.
Example: John is an electrician. He donates 10 hours of time to his church’s construction project. He cannot deduct the value of his donated labor, but he can deduct the value of materials he purchased in performing the donated labor.
Example: Several church members go on a short-term missions project to another country. The value of their labor is not deductible, but they can deduct their unreimbursed travel expenses (transportation, meals, lodging) incurred in performing the project.
Q: I gave $135 to my church when I registered for a spring retreat. Can I deduct that?
A: No, assuming you received benefits (e.g., lodging, instruction, materials) worth $135 or more. Charitable contributions generally are deductible only to the extent they exceed the value of any premium or benefit received by the donor in return for the contribution.
Q: Is there any limit to the amount of my contributions I can deduct on my taxes?
A: Yes. A contribution deduction ordinarily cannot exceed 50 percent of a donor’s adjusted gross income (a 30 percent rule applies in some cases). Donors who exceed these limits may be able to “carry over” their excess contribution and deduct it in future years.
Q: I designated my contribution to the church benevolence fund. Is it deductible?
A: That depends. “Designated contributions” are those made to a church for a specified purpose. If the purpose is an approved project or program of the church, you can deduct the contribution (if you claim itemized deductions on Schedule A).
Example: Your $100 gift designating the church benevolence fund is deductible.
However, if you specify that your contribution be applied to a named individual, then no deduction is allowed – unless the church exercises full administrative and accounting control over the donated funds.
Example: You donate $200 to the church and instruct the church treasurer to give the $200 to a specified needy family in the church. This contribution is not tax-deductible.
Contributions to a church or missions agency that designate a particular missionary may be tax-deductible if the church or missions agency exercises full administrative control over the contributions and ensures that they are spent in furtherance of the church’s tax-exempt purposes.
Example: You donate $75 to a denominational missions agency and specify a particular missionary as the recipient. This contribution is tax-deductible, even though it names a missionary, so long as the missions agency has full administrative and accounting control over the funds.
Q: What kind of records do I need in order to prove I made a contribution?
A: For individual cash contributions under $250: You must have a back record (such as a cancelled check) or a receipt from the church containing the church’s name, and the date and amount of each cash contribution.
For individual contributions (cash or property) of $250 or more: You must receive a written receipt from your church that states whether you received goods or services for your contributions (and if so, the value of the goods or services received). If you received no goods or services for the contributions, then the receipt must say so or indicate that only “intangible religious benefits” were received. If you’ve made individual contributions of $250 or more, don’t file your federal income tax return until you receive a contribution statement from your church that satisfies these requirements. Otherwise, your contributions may not be deductible. Canceled checks cannot be used to substantiate cash contributions of $250 or more.
For non-cash property valued at $500 or more: Other rules apply (see the instructions to IRS Form 8283). If the value is more than $5,000, you must obtain a qualified appraisal of the property and attach an “appraisal summary” (IRS Form 8283) to the tax return on which the contribution is claimed. Some exceptions apply.
For contributions of cars, boats, or planes: If a church sells the donated property without significant use, the donor’s contribution deduction is limited to the sales proceeds. In addition, the church must provide the donor, and the IRS, with a written acknowledgement (use IRS Form 1098-C) by the deadline prescribed by law. If the church “significantly uses” the property, the donor can deduct the market value. However, the church must still provide Form 1098-C to the donor and the IRS. See the instructions to Form 1098-C for more details. Qualified appraisal and appraisal summary requirements apply if deduction exceeds $5,000 (see instructions to Form 8283).
About the Author. Richard Hammar, a graduate of Harvard Law School, is an attorney and certified public accountant specializing in legal and tax issues for churches and clergy.