NASHVILLE, Tenn. Churchgoers still in the habit of placing cash in offering plates will need to change the way they give if they plan to receive a deduction for the contribution in next year’s taxes, according to tax law changes approved by Congress last summer that are now in effect.
“To deduct any charitable donation of money, a taxpayer must have a bank record or a written communication from the charity showing the name of the charity and the date and amount of the contribution,” an Internal Revenue Service news release said. “A bank record includes canceled checks, bank or credit union statements and credit card statements.”
Bank or credit union statements should indicate the name of the charity or church and the date and amount paid, according to the rules.
Mike Weeks, president of the Southern Baptist Foundation, told Baptist Press the changes should have little impact on Southern Baptist churches today.
“Most taxpayers are already disciplined to document their giving, and it is highly unlikely that they will reduce their level of giving as a result of the recent changes by the IRS,” Weeks said. “Very few give by way of cash anymore, and if they do make a significant cash contribution, it likely is without regard to the tax consequences. Christians give because they are led to give obediently, and not because it may generate favorable income tax consequences if properly documented.”
According to the IRS, donations of money include those made in cash or by check, electronic funds transfer, credit card and payroll deduction.
“For payroll deductions, the taxpayer should retain a pay stub, Form W-2 wage statement or other document furnished by the employer showing the total amount withheld for charity, along with the pledge card showing the name of the charity,” the IRS said.
Before the changes, taxpayers could provide personal bank registers, diaries or notes made around the time of the donation in order to document their contributions. But such records are no longer sufficient for contributions under $250. Charitable contributions of $250 or more still require written acknowledgement from the charity, the rules state.
In figuring whether a contribution is $250 or more, the IRS says separate contributions should not be combined. For example, if a person gives places $25 in the offering plate each Sunday, the weekly payments should not be combined. Each payment is a separate contribution.
For each cash contribution that is less than $250, the IRS now requires the taxpayer to keep a canceled check, a receipt or other reliable records from the charitable organization showing the name of the organization, the date of the contribution and the amount of the contribution.
Contributions of $250 or more require an acknowledgement from the qualified organization, the IRS says, and if more than one contribution of $250 or more was made, the taxpayer must have either a separate acknowledgement for each or one acknowledgement that shows the total contributions.
The written acknowledgement from the church or other charitable organization must include the amount of money donated and must be submitted to the IRS on the date the taxpayer files a return for the year the contribution was made or by the due date for filing the return.
New rules regarding cash donations are expected to impact smaller churches most, especially if they don’t already give year-end statements. But the rules are supposed to provide churches with better protection against embezzlement by mandating more comprehensive recordkeeping.
Anonymous cash donations are rare in churches these days, though, as most people have moved toward writing checks or placing their money in offering envelopes with their names on them.
Lisa Francisco, business manager for the Nashville-area Brentwood Baptist Church, told The Tennessean newspaper that less than 1 percent of all Sunday morning offerings at their 6,000-member church come in the form of unidentified cash. The church provides quarterly statements to its members listing their contributions.
For more information, visit www.irs.gov.