Churches
This page contains answers to questions commonly received from churches and those serving the Lord as Christian ministers, or fulltimers. Additional information may be found on the IRS web site at www.irs.gov or call our office.
► Does the church have to give a receipt for donations?
Does the church have to give a receipt for donations?
In order for an individual to be able to deduct his charitable contributions on his tax return, he must maintain a record of the contribution in the form of a bank record, such as a cancelled check, or a written communication from the charity. In addition, for any single contribution of $250 or more, the donor must obtain a contemporaneous, written acknowledgment of the contribution from the recipient organization in order to claim a tax deduction.
While there is no penalty to the church for not providing a receipt, the church members may not deduct their contributions unless they have a receipt. Therefore many churches routinely provide a receipt as a convenience to their members.
The receipt or acknowledgment should show the name of the church, the date of the contribution, and the amount of the contribution. It should also include a statement that no goods or services were provided by the church in return for the contribution, or that the only benefits provided in return for the contribution were intangible religious benefits (assuming of course that was the case.) Payments for conferences, books or other activities should not be included; these are not contributions because something was received in return for the payment.
If the contribution consisted of non-cash items (e.g., a computer was donated) or out-of-pocket expenses (e.g., an elder paid his own way to attend an out of town elders’ meeting), the letter should contain a description, but not the value, of the non-cash contribution. It is up to the donor to establish the value.
In order for an individual to be able to deduct his charitable contributions on his tax return, he must maintain a record of the contribution in the form of a bank record, such as a cancelled check, or a written communication from the charity. In addition, for any single contribution of $250 or more, the donor must obtain a contemporaneous, written acknowledgment of the contribution from the recipient organization in order to claim a tax deduction.
While there is no penalty to the church for not providing a receipt, the church members may not deduct their contributions unless they have a receipt. Therefore many churches routinely provide a receipt as a convenience to their members.
The receipt or acknowledgment should show the name of the church, the date of the contribution, and the amount of the contribution. It should also include a statement that no goods or services were provided by the church in return for the contribution, or that the only benefits provided in return for the contribution were intangible religious benefits (assuming of course that was the case.) Payments for conferences, books or other activities should not be included; these are not contributions because something was received in return for the payment.
If the contribution consisted of non-cash items (e.g., a computer was donated) or out-of-pocket expenses (e.g., an elder paid his own way to attend an out of town elders’ meeting), the letter should contain a description, but not the value, of the non-cash contribution. It is up to the donor to establish the value.
In order for an individual to be able to deduct his charitable contributions on his tax return, he must maintain a record of the contribution in the form of a bank record, such as a cancelled check, or a written communication from the charity.
► How should the receipt or acknowledgment be worded?
How should the receipt or acknowledgment be worded?
The receipt must include a statement that no benefits were received in return for the donation except intangible religious benefits. It should include the name of the church, the date of the contribution, and the amount of the contribution.
For non-cash items (e.g., a computer was donated) or out-of-pocket expenses (e.g., an elder paid his own way to attend an out of town elders’ meeting), the acknowledgment should contain a description, but not the value, of the non-cash contribution. It is up to the donor to establish the value.
Suggested wording for the acknowledgment:
The receipt must include a statement that no benefits were received in return for the donation except intangible religious benefits. It should include the name of the church, the date of the contribution, and the amount of the contribution.
For non-cash items (e.g., a computer was donated) or out-of-pocket expenses (e.g., an elder paid his own way to attend an out of town elders’ meeting), the acknowledgment should contain a description, but not the value, of the non-cash contribution. It is up to the donor to establish the value.
Suggested wording for the acknowledgment:
"The Church in _________ thankfully acknowledges the contribution of _______(dollar amount or items contributed) by __________(name) on _______(date). The only benefits provided in return for the contribution were intangible religious benefits."
If the contribution was for out-of-pocket expenses, the wording could be:"The Church in _________ thankfully acknowledges the services provided by ___________(name) on ________(date) in connection with ______________(activity for which services were provided). The only benefits provided in return for the contribution were intangible religious benefits.”
The receipt must include a statement that no benefits were received in return for the donation except intangible religious benefits.
► How do we handle the housing allowance for fulltimers?
How do we handle the housing allowance for fulltimers?
Co-workers and fulltimers, as ministers of the gospel, may exclude a housing allowance from their income for income tax purposes. The entity that makes the payments to the fulltimer determines the amount of the housing allowance. It is to be determined before the payments are made and should be documented (e.g., in the minutes). The housing allowance can be a fixed amount or a percentage, up to 100%, as long as the amount is reasonable. Be sure to inform the fulltimers of the amount of their housing allowance.
Co-workers and fulltimers, as ministers of the gospel, may exclude a housing allowance from their income for income tax purposes. The entity that makes the payments to the fulltimer determines the amount of the housing allowance. It is to be determined before the payments are made and should be documented (e.g., in the minutes). The housing allowance can be a fixed amount or a percentage, up to 100%, as long as the amount is reasonable. Be sure to inform the fulltimers of the amount of their housing allowance.
Co-workers and fulltimers, as ministers of the gospel, may exclude a housing allowance from their income for income tax purposes.
► Does the church have to issue 1099s?
Does the church have to issue 1099s?
A Form 1099-MISC is required to be filed for each person who was paid $600 or more for services during the year. This includes support paid for full-time Christian workers and fulltimers even if the payment is called a “gift.” It generally does not include gifts to needy saints unless the needy saints were serving. If the fulltimers are treated as employees, they will receive a W-2, not a 1099.
The 1099s are to be delivered to the recipients by January 31 and are to be filed with the IRS by February 28. Use Form 1096 as the transmittal.
A Form 1099-MISC is required to be filed for each person who was paid $600 or more for services during the year. This includes support paid for full-time Christian workers and fulltimers even if the payment is called a “gift.” It generally does not include gifts to needy saints unless the needy saints were serving. If the fulltimers are treated as employees, they will receive a W-2, not a 1099.
The 1099s are to be delivered to the recipients by January 31 and are to be filed with the IRS by February 28. Use Form 1096 as the transmittal.
A Form 1099-MISC is required to be filed for each person who was paid $600 or more for services during the year. This includes support paid for Christian workers and fulltimers even if the payment is called a “gift.”
