Author Topic: year-end charitable contribution by credit card  (Read 531 times)

dhc

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year-end charitable contribution by credit card
« on: February 09, 2018, 09:31:31 PM »
I made a charitable contribution by credit card that posted December 28, but the charity says they didn't receive it until January 3 and thus won't acknowledge it as a 2017 gift.


Am I right? Are they? Show your work, please - I'd love to be able to point them to good IRS guidance on the topic. So far all I've found is this press release, which seems to agree with me but isn't as clear as I'd hoped.

HawkeyeNFO

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Re: year-end charitable contribution by credit card
« Reply #1 on: February 10, 2018, 02:36:37 PM »
If it's on your statement as of 2017, then I would think you could claim it for that year if you want.  Keep a copy of the receipt or credit card statement in case the IRS asks.  Unless it's a HUGE amount of money, I don't think anyone will care anyways.  just don't get greedy and try to take advantage of things and claim it for both years.  Chances of being audited for this are pretty slim.

SeattleCPA

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Re: year-end charitable contribution by credit card
« Reply #2 on: February 11, 2018, 07:18:44 AM »
Normally, a cash basis taxpayer paying by credit card would get deduction for credit card charge made on December 28... but I think the rules for substantiating charitable contributions mean that if you can't get an acknowledgement that they received in 2017, you can't deduct for 2017.

I don't remember the taxpayers'names, but one sort of sad tax court decision showed up semi-recently where taxpayers definitely gave money to charity but the charity (as I remember it) bungled the documentation. Judge said, hey, sorry... law is clear, you don't get the deduction.

ISawTheLight

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Re: year-end charitable contribution by credit card
« Reply #3 on: February 12, 2018, 10:24:53 AM »
IRS Pub 526 discusses all things relating to Charitable Contributions.  Page 13 specifically says "Contributions charged on your bank credit card are deductible in the year you make the charge."  Keep the credit card statement in your tax file for proof, in case you get questioned.  Also, the acknowledgement from the charity does not actually have to have a date on it (check out page 17-18 of the Pub).

If you had sent them a check on December 28 and they didn't get it until January 3, you would be able to deduct it.  There is no doubt on that outcome.  This is essentially the same thing.

SeattleCPA

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Re: year-end charitable contribution by credit card
« Reply #4 on: February 12, 2018, 12:24:09 PM »
Here's the tax court case court I alluded to:

https://www.thetaxadviser.com/issues/2017/nov/charitable-contribution-substantiation-procedures.html

I think the issue is taxpayer needs substantiation from donee organization.

SeattleCPA

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Re: year-end charitable contribution by credit card
« Reply #5 on: February 12, 2018, 12:30:27 PM »
Here's the actual law from Sec. 170(f)(8)

(8) Substantiation requirement for certain contributions
(A) General rule
No deduction shall be allowed under subsection (a) for any contribution of $250 or more unless the taxpayer substantiates the contribution by a contemporaneous written acknowledgment of the contribution by the donee organization that meets the requirements of subparagraph (B).

(B) Content of acknowledgementAn acknowledgement meets the requirements of this subparagraph if it includes the following information:
(i) The amount of cash and a description (but not value) of any property other than cash contributed.
(ii) Whether the donee organization provided any goods or services in consideration, in whole or in part, for any property described in clause (i).
(iii) A description and good faith estimate of the value of any goods or services referred to in clause (ii) or, if such goods or services consist solely of intangible religious benefits, a statement to that effect.
For purposes of this subparagraph, the term “intangible religious benefit” means any intangible religious benefit which is provided by an organization organized exclusively for religious purposes and which generally is not sold in a commercial transaction outside the donative context.

The problem is taxpayer needs substantiation... and if donee says they didn't get in 2017, I don't know how you get them to substantiate taxpayer gave in 2017.

dhc

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Re: year-end charitable contribution by credit card
« Reply #6 on: February 12, 2018, 05:40:51 PM »
Thanks a lot, SeattleCPA - you've provided just the sort of thing I was looking for.


I'm hoping that although I may not be able to convince them to explicitly acknowledge the gift as a 2017 gift, I may still be able to convince them to send me acknowledgement of the gift itself, which I understand I must have before I file my taxes. Seems to me that acknowledgement, even if it has the January date on it, plus my credit card statement and the original transaction receipt should together be sufficient proof.

SeattleCPA

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Re: year-end charitable contribution by credit card
« Reply #7 on: February 12, 2018, 07:20:48 PM »
Thanks a lot, SeattleCPA - you've provided just the sort of thing I was looking for.


I'm hoping that although I may not be able to convince them to explicitly acknowledge the gift as a 2017 gift, I may still be able to convince them to send me acknowledgement of the gift itself, which I understand I must have before I file my taxes. Seems to me that acknowledgement, even if it has the January date on it, plus my credit card statement and the original transaction receipt should together be sufficient proof.

You're unlikely to be audited. For what that's worth...

stepitup

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Re: year-end charitable contribution by credit card
« Reply #8 on: February 12, 2018, 09:02:05 PM »
My reading of Page 13 of Publication 526 says that it is deductible in the year that the charge is made by your credit card. https://www.irs.gov/pub/irs-pdf/p526.pdf

If it's over $250 you need the charity to acknowledge the receipt of the gift, but they need not mention anything about the date. Just that they received it and it wasn't in exchange for goods and services.

I know others have mentioned case law, which I can't comment on, but it seems like the publication is pretty clear.

jc4

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Re: year-end charitable contribution by credit card
« Reply #9 on: February 13, 2018, 07:11:51 AM »
We've done the same thing the last two years. I started making donations around the 15th-20th to avoid this because we've had the same problems.

1. I saved multiple records of the documentation from my financial institution.
2. I went back an forth with the charity for a few emails. Eventually, they agreed to provide the documentation. Really, this meant their external facing fundraiser person, had to email their finance people several times, and get the fianance people to make a form outside of their standard / automated process.

One charity was happy to have the money, and sent the form right away, one as described above took some work.

Blonde Lawyer

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Re: year-end charitable contribution by credit card
« Reply #10 on: February 13, 2018, 07:28:25 AM »
My reading of Page 13 of Publication 526 says that it is deductible in the year that the charge is made by your credit card. https://www.irs.gov/pub/irs-pdf/p526.pdf

If it's over $250 you need the charity to acknowledge the receipt of the gift, but they need not mention anything about the date. Just that they received it and it wasn't in exchange for goods and services.

I know others have mentioned case law, which I can't comment on, but it seems like the publication is pretty clear.

Just curious, is the $250 per donation or aggregate for the year? There's a charity I donate $100 to every couple of month.  They usually email an acknowledgement right away but I'm just curious.

ISawTheLight

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Re: year-end charitable contribution by credit card
« Reply #11 on: February 13, 2018, 08:51:35 AM »
It is $250 per donation.  If you give a charity $100 every couple of months you need to have a record of your giving (cancelled check, credit card statement, etc.), but you are not required to have an acknowledgment from the charity.

Blonde Lawyer

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Re: year-end charitable contribution by credit card
« Reply #12 on: February 13, 2018, 01:39:05 PM »
It is $250 per donation.  If you give a charity $100 every couple of months you need to have a record of your giving (cancelled check, credit card statement, etc.), but you are not required to have an acknowledgment from the charity.

Thanks!