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The Tax Angle: What to Know When Donating to Your Church, Synagogue or any Religious Institution

Alex Moretsky

Alex Moretsky

By Alex Moretsky, June 2014

Many people contribute to their religious institutions whether it is in the form of cash payments or donations of household goods and clothing. Sometimes services are also provided to the non-profit organization. If you are planning on making a deduction on your taxes for donations or services, then you must follow the Internal Revenue Service (IRS) rules.

Standard IRS rules apply to all charitable donations, including religious offerings: 1) The organization must be a qualified one; 2) if you receive any benefit from the contribution you may only deduct the amount exceeding the benefit; 3) stock or in-cash property is worth its fair market value; 4) you must maintain a bank record, payroll deduction or written communication from the organization containing the name, date and amount for donations of $250.00 or more; 5) taxpayers donating over $5,000 must complete section B of Form 8283 which requires appraisal.

Also, church charitable contributions must be itemized on Schedule A if your total itemized deductions exceeds the standard deduction. Keep in mind that your religious plus all other donations cannot exceed 50% of adjusted gross income. If it does you may not deduct 100% of your donations. The good news is the balance can be used over the next five years of tax returns.

Okay that’s the technical, why-I-hire-a- CPA tax code regulations. For the average charitable giving citizen donating cash, items or services just remember the following:

1. Retain a receipt, canceled check or bank/credit card statement It is not necessary to send these to the IRS, BUT if contacted, i.e. audited, you are required to have documentation

2. If your donation is in excess of $250.00, you must also obtain written acknowledgement from your religious institution (I recommend getting receipts even if you donate less because the total amount you donate over the course of a year may exceed $250.00)

3. The acknowledgement should include the following: amount; description of any goods and services provided in exchange; statement that the remaining benefit you received is an intangible religious one;

4. Name and address of organization

5. Written acknowledgement of at least $250. but less than $500 ( non-cash)

6. Written acknowledgement of cash $250.+

7. If other than cash, assess the fair market value of the property being donated and deducted

8. If donating an automobile, have the vehicle ID#

Don’t let all these rules deter you from your ooommmm moments of thoughtful contemplation. Just be mindful that while tossing your loose bills and change into the collection basket, you might need a careful record of your benevolence come tax time. And if the IRS contacts you, seek the capable advice of a Montgomery County and Philadelphia tax attorney.