I am continuing on the topic of contributions. My previous post clarified some questions any of us working in the fund accounting world might have. Here are a few more answers to the most asked contribution questions.
Is there a specific form I am suppose to use for contribution statement?
The receipt required does not have to have any certain design, unless, form 1098-C comes into play. Use Form 1098-C, Contributions of Motor Vehicles, Boats, and Airplanes, when any of these have been donated and valued at more than $500.
When sending a receipt you have various options. You can send a letter, postcard, a computer genterated form, or even via email. The important thing to remember is included the information we covered in the last post.
How do I handle non-cash contributions?
A written receipt should be issued for all non-cash donations. Your organization is now responsible for establishishing the value in most cases and should not include any value on the receipt. An example of a noncash donation receipt can be found here.
What about gifts to pastors or individuals in need?
In most cases, gifts given to pastors or individuals in need do not qualify as chartiable contributions for the sake of tax deduction and would not be included in an annual contribution statement.
An example would be someone who decided to purchase a gift card to a restaurant for the pastor. While this is a generous gift, a tax deduction cannot be taken by the giver of the card.
How is a love offering (usually in church settings) qualified?
If a love offering is collected for an individual in need, donations would be tax deductible and the offering is not categorized as taxable income to the individual in need, either.
There are a couple of situations where love offerings can be confusing. The guidelines for love offerings must fall under these criteria in order for the gift to be nontaxable for the individual in need. The gift needs to not have been solicited, has no service attached, spontaneous in nature, and does not qualify as a tax deduction for the donor. However, when the congregation acts as a whole, the love offering is usually considered taxable to the minister or guest speaker and tax deductible to the donor.
Remember that contributions are tracked automatically through Aplos. Look through our website for more information.
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