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Paperwork for Cash Contributions

Starting in 2007, small cash donations will absolutely need some paperwork behind them, or no charitable deduction is allowed. What does this mean?? According to Accounting Today, vol. 20 no. 17, September 18 – October 1, 2006 edition,

donors of charitable contributions of cash, checks or other monetary gifts must maintain either a bank record (bank statement), letter or other written communication from the donee indicating the name of the donee organization, the date that the contribution was made and the amount of the contribution.

Donations of Clothing or Household Items

Effective for donations made after August 17, 2006, deductions for charitable contributions of clothing or household items are limited to items in good used condition or better. According to Accounting Today, vol. 20 no. 17, September 18 – October 1, 2006 edition,

IRA Distributions to Charities

According to recent tax law changes and

Accounting Today, vol. 20 no. 17, September 18 – October 1, 2006 edition,
Individuals age 70 ½ or older can distribute up to $100,000 of their IRA balance to charitable organizations in 2006 and in 2007 without recognizing income. Unless it is a Roth IRA, the individual cannot double up and also take a charitable deduction. So, if you are looking to make a charitable contribution and would like to have a tax-free IRA distribution…do so in 2006 and 2007…if you are 70 ½.

What a deal!

Increase in Charitable Giving

Despite increases in gasoline prices and other necessities, Americans found a way to give 2.7 percent more to charitable causes last year than in 2004, according to a report by the American Association of Fundraising Counsel. Experts say the increase was propelled by a series of significant natural disasters including Hurricane Katrina and the tsunami in Southeast Asia, The New York Times reported in June

How are these types of contributions to be recorded, in accordance with generally accepted accounting principles?

Ordained Ministers and Social Security

FACTS: Ministers are self-employed for social security purposes, that is, they pay their own social security taxes. Churches are not supposed to withhold social security taxes for ordained ministers.

OPTION: Ministers have the option as to whether or not to have federal tax withheld from their check.

Some ministers have extra AMOUNTS withheld from their checks in federal withholding to cover the social security taxes they are to personally pay FOR THE YEAR.

Ministries giving to ministries…Can this affect excessive compensation… (3 of 3)

In our two previous posts…we’ve discussed the requirements for “donating” to other ministers and ministries. In this third posting, we will address “gifts” affecting excessive compensation…

Donations or gifts received by “visiting or guest pastors” from a recipient congregation must be included in the estimated salary for a pastor. These special speaking events can accumulate, $10,000 here, $10,000 there. These “gifts” are considered taxable income to the pastor and should be included in the annual compensation analysis of the pastor.

Ministries giving to ministries…when it is not a “donation”…(2 of 3)

When a pastor performs services for a recipient congregation and the recipient congregation would like to “pay” the guest pastor for those services. The guest pastor has performed “services” consistent with the receipient congregation’s exempt purpose – those services are considered “professional services” and not a donation or contribution or mission expense. The funds received by the guest pastor represents taxable income, reported by a 1099.

Ministries Giving to Ministries, What’s O.K? (1 of 3)

A well respected pastor is retiring from his local congregation. Other local community congregations and ministries would like to honor his service by donating to the retiring pastor’s congregation for a retirement gift (cash). Is this an allowable donation from the local pastors, congregations and ministries?

Several points are critical in understanding the IRS’ intent for allowing donations…

Valuing Donated Vehicles

TAX Basis for donor/donee:
The IRS, in Rev. Rule 2002-67 (addressing the fair market value of a donated auto for charitable deduction purposes) states:

One method of determining fair market value of a single donated car is by reference to an established used car pricing guide. However, a used car pricing guide establishes fair market value only if the guide lists the sales price for a car that is in the same make, model, and year, sold in the same area, and in the same condition, as the donated car.

Personal cell phone calls during Ministry trip (2 of 2)

If an employee uses a ministry provided cell phone to call home to a spouse while on a ministry trip, the same rules previously discussed apply. It depends on the actual level of use. For instance, one short call home a night probably would fall into the de minimis fringe category, but lengthy and numerous calls probably should be attributed to the employee as compensation.

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