Clergy are allowed an income tax deduction for charitable contributions made during a tax year to qualifying organizations. Cash contributions must be substantiated by cancelled checks or receipts from the donee organization showing the organization’s name, date and amount of the donation or other reliable information. Gifts of property must be substantiated by similar receipts that also describe the property and its location. Each charitable donation of $250 or more requires additional substantiation. The taxpayer must substantiate the donation by receiving a “contemporaneous” written acknowledgement of the donation from the donee organization that includes: • The amount of cash, or a description of any property, other than cash, donated. • A statement by the donee organization as to whether the donee organization provided any goods or services in consideration for any cash or property donated. • A description and good faith estimate of the value of any goods or services provided by the donee organization for the donation. During IRS examinations, agents are looking closely at the documentation supporting charitable contributions of both cash and property. Considering the unrelenting focus on charitable donations documentation by the IRS and the willingness of the courts to side with the IRS—even when taxpayers show no “sinister” intent—taxpayers need to be particularly aware of their responsibility to support and document the donation. No one should assume that donee charitable organizations know all the requirements and properly prepare their written acknowledgements, regardless of their size and reputation. Failure to obtain a proper “contemporaneous” written acknowledgement is fatal to sustaining the tax deduction. Source: Clergy Financial Resources
Clergy Financial Resources is a national accounting and finance organization serving churches and clergy since 1980. They have an unparalleled tax expertise on the complex issues associated with clergy tax law, clergy taxes, clergy compensation and church payroll. Clergy Financial Resources is a valuable resource for clergy, churches and denominations.
Clergy Financial Resources serves as a resource for clients to help analyze the complexity of clergy tax law, church payroll & HR issues. Our professionals are committed to helping clients stay informed about tax news, developments and trends in various specialty areas.
This article is intended to provide readers with guidance in tax matters. The article does not constitute, and should not be treated as professional advice regarding the use of any particular tax technique. Every effort has been made to assure the accuracy of the information. Clergy Financial Resources and the author do not assume responsibility for any individual’s reliance upon the information provided in the article. Readers should independently verify all information before applying it to a particular fact situation, and should independently determine the impact of any particular tax planning technique. If you are seeking legal advice, you are encouraged to consult an attorney.
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