We have a number of members that give money to the church and then specify on the offering envelope that it is to go to a specific person. These people may be missionaries, church staff, or even another church member. I currently set up contribution funds and subaccounts in Powerchurch to track these contributions and the eventual payment by the church to the individual.
The problem is that I.R.S. Publication 526 says that you cannot deduct contributions to a specific individual as an itemized deduction. It even goes on to say that "this includes contributions to a qualified organization if you indicate that your contribution is for a specific person". Does anyone know of any special provision in the IRS code to the contrary that allows these deductions? If not, I am afraid we will have some very unhappy church members when they find out that their designated gifts are non-tax deductible.
I would appreciate any comments regarding this.
Tax Deductibility of Designated Contributions
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Re: Tax Deductibility of Designated Contributions
Interesting problem, and it doesn't look like there is a way around it from a casual reading of the publication. I would suggest you get in touch with a tax advisor who specializes in church taxes/finances, or with someone in your denomination's central office (if there is one).matt wrote:We have a number of members that give money to the church and then specify on the offering envelope that it is to go to a specific person. These people may be missionaries, church staff, or even another church member. I currently set up contribution funds and subaccounts in Powerchurch to track these contributions and the eventual payment by the church to the individual.
The problem is that I.R.S. Publication 526 says that you cannot deduct contributions to a specific individual as an itemized deduction. It even goes on to say that "this includes contributions to a qualified organization if you indicate that your contribution is for a specific person". Does anyone know of any special provision in the IRS code to the contrary that allows these deductions? If not, I am afraid we will have some very unhappy church members when they find out that their designated gifts are non-tax deductible.
I would appreciate any comments regarding this.
Neil Zampella
Using PC+ since 1999.
Using PC+ since 1999.
Matt:
You can not deduct contributions to a specific individuals. For missionaires though you could deduct those contributions if the charity exercies sufficient control over the gift. For example many local churches submit their missions contributions to a central or district denomination authority who controls the disbursement then. This would qualify. As far as the workers and individuals, technically no. You can't use the church as a conduit. If the individual gives to the church benevolence fund and the church controls how and to whom that money is disbursed, then that is deductible. There are several publications out on the market that are good reference guides on this subject.
You can not deduct contributions to a specific individuals. For missionaires though you could deduct those contributions if the charity exercies sufficient control over the gift. For example many local churches submit their missions contributions to a central or district denomination authority who controls the disbursement then. This would qualify. As far as the workers and individuals, technically no. You can't use the church as a conduit. If the individual gives to the church benevolence fund and the church controls how and to whom that money is disbursed, then that is deductible. There are several publications out on the market that are good reference guides on this subject.
Randy B
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foxygramps
- Posts: 83
- Joined: Tue Sep 23, 2003 4:22 pm
- Location: Our Redeemer Lutheran Church
You might take a look at this site. www.ChurchLawToday.com.
$50 will get you a membership that all of your Church board can access using the same name and password that you set up.
There is also a higher priced membership that allows access to all of your Congregations members, but if you have a lot of "jailhouse Lawyers", (or even one), that might not be a good idea.
It also has a newsletter aimed at Church treasurers, and many other publications addressing specific topics.
God Luck
$50 will get you a membership that all of your Church board can access using the same name and password that you set up.
There is also a higher priced membership that allows access to all of your Congregations members, but if you have a lot of "jailhouse Lawyers", (or even one), that might not be a good idea.
It also has a newsletter aimed at Church treasurers, and many other publications addressing specific topics.
God Luck