Contributions received after 12/31

[OhBeWan]

The IRS allows taxpayers to deduct checks mailed before 12/31. But what are the requirements on churches? Let me give you an example. 12/31 was a Sunday. I did a deposit dated 12/31. Took it to the night depository. Every check on that deposit received credit in 2023. What about next week's deposit?

Am I required to look at the next week's mail and any check that is dated in 2023 and is postmarked in 2023 gets put in a special deposit that I backdate to 2023? What about those checks that are billpay checks from a bank that are dated in 2023 but have no postmark. Should those be set aside and put in a special deposit dated in 2023?

I have asked a number of different people and they say things like: 1) Well, everybody does it. So backdate that deposit. 2) Well, to keep the donors happy you have to backdate and give the donor credit. 3) No, record anything you get in 2024 as a 2024 contribution. It is up to the donor to decide what year they mailed it. 4) The IRS requires that checks that are dated and mailed in 2023 be on the donor statement for 2023. So you are required to go through your checks in early 2024 and make a separate deposit (dated 2023).

[NeilZ]

The IRS allows taxpayers to deduct checks mailed before 12/31. But what are the requirements on churches? Let me give you an example. 12/31 was a Sunday. I did a deposit dated 12/31. Took it to the night depository. Every check on that deposit received credit in 2023. What about next week's deposit?

Am I required to look at the next week's mail and any check that is dated in 2023 and is postmarked in 2023 gets put in a special deposit that I backdate to 2023? What about those checks that are billpay checks from a bank that are dated in 2023 but have no postmark. Should those be set aside and put in a special deposit dated in 2023?

I have asked a number of different people and they say things like: 1) Well, everybody does it. So backdate that deposit. 2) Well, to keep the donors happy you have to backdate and give the donor credit. 3) No, record anything you get in 2024 as a 2024 contribution. It is up to the donor to decide what year they mailed it. 4) The IRS requires that checks that are dated and mailed in 2023 be on the donor statement for 2023. So you are required to go through your checks in early 2024 and make a separate deposit (dated 2023).

Churches run on a cash basis, you cannot 'backdate' a deposit, and the bank will not use any backdate anyway. However, you CAN adjust the date of the contribution when you enter the contribution.

I would separate any checks that are date stamped Dec 31 or earlier out. Enter the current date, enter the contributions for that, then change the date to 12/31 and enter any for that date.

When you go to print the deposit slip make sure that the current date and 12/31 are checked to be included in the deposit slip report. Then use that report to either print the deposit slip or print the report to use those totals.

The deposits you entered for 12/31 will appear in the 2023 contribution statements.

That said ... in every church I was in, we made sure that there was a notice in the Church Bulletin, any newsletters, and website for the entire month of December that for credit in the current year, all mailed donations should be in the office or entered via online donation by the close of business on the last business day of December. This way the drop box deposit was done in the 'current' year. This covered most, if not all, of those donations. Anything that arrived after that went into 2024.

We don't have an issue with the Sunday's that are in the last day of the month, as our Contribution entry volunteers do that after worship, and a drop deposit is then made. So everything that was received in the year, was entered in the year.

Again, there's a reason for this, churches operate on a cash basis, and what comes in during the year, is considered income FOR THAT YEAR. Donations sent in 2023 but received and deposited in 2024 show up in the I&E report for January.

[OhBeWan]

Thanks, Neil. You have given me advice on how to deal with the system and some checks dated in various years.

You also answered what I was really looking for which is to not go through the exercise of making a separate backdated deposit. You have further stated that, in your experience, you have let people know "YOU BETTER GET THAT CHECK IN THE DOOR BEFORE 12/31, IF YOU WANT CREDIT IN THE PRIOR YEAR." Now you didn't say exactly what I said and you didn't do it in all caps, but you still sent a strong message to not play last minute games. Is that correct?

[NeilZ]

Thanks, Neil. You have given me advice on how to deal with the system and some checks dated in various years.

You also answered what I was really looking for which is to not go through the exercise of making a separate backdated deposit. You have further stated that, in your experience, you have let people know "YOU BETTER GET THAT CHECK IN THE DOOR BEFORE 12/31, IF YOU WANT CREDIT IN THE PRIOR YEAR." Now you didn't say exactly what I said and you didn't do it in all caps, but you still sent a strong message to not play last minute games. Is that correct?

You learn fast padawan ...