Is that deductible?
Throughout the year, your donors and supporters will make charitable contributions in anticipation of an income tax deduction. Following the IRS rules can make sure your ministry, and its supporters, are doing the right thing in the right way:
- Be sure your church or non-profit qualifies as a charity under IRC Section 501(c)3.
- If your organization offers something of value in return for a contribution, the deduction may be limited. A gift to your organization that returns to the contributor a book or a CD may really be a purchase. Compare the amount of the donation to the value of the gift to see what the net charitable amount is.
- Non-cash gifts can be difficult to value. Collectibles typically require an appraisal to support the deduction. Vehicles can be deducted for either the church’s selling price or at the fair market value if they will be used in the organization’s operations. Household items must be valued at garage sale or thrift store prices and clothes must be in good condition.
- All contributions must have a receipt, billing statement, bank record or credit card voucher to support them. Non-receipted cash gifts no longer qualify.
- Remember that mileage driven for charitable work qualifies as a non-cash donation at the rate of 14 cents per mile. Keep this fact in mind when your members are visiting for the church or delivering Meals on Wheels. Supplies purchased for Sunday school or postage paid for materials sent for missions fall in this same category.
- If your members attach strings to the gift, such as requiring its return if it’s not used as they specify or if they maintain possession of the item until certain criteria are met, then they don’t have a completed gift and there is no deduction.
Keeping good records is the key. If it all sounds too complicated, the staff at Online Stewardship is here to help. Call us at (904) 398-4747 or visit our contact page and we’ll give you a call.
