Did You Know?

Ms. Pamela Breen
Administrator
pambreen@aol.com
December 2011

Year end giving reports ..... When we are in the midst of the Christmas season it is a hard time of the year to begin thinking about year end reports but it is good to plan ahead for what you need to have in place.  Remember your donors need giving statements (or receipts) before they file their income tax reports.  Many people who expect a refund will be getting those in earlier than usual.  The giving reports or receipts need to be received by donors by January 30th but the earlier the better.

Remind your congregation that to claim a donation in 2011 it must be received by the church no later than December 31, 2011 or postmarked by December 31, 2011.

IRS Guidelines for Monetary Donations
What donors need to have in hand to deduct a charitable donation of money:
    ✓    a bank record or written communication from the charity showing the name of the charity and the date and amount of the contribution. A bank record includes canceled checks, bank or credit union statements and credit card statements. Bank or credit union statements should show the name of the charity and the date and amount paid. Credit card statements should show the name of the charity and the transaction posting date.

    ✓    Donations of money include those made in cash or by check, electronic funds transfer, credit card, and payroll deduction. For payroll deductions, the taxpayer should retain a pay stub, Form W-2 wage statement or other document furnished by the employer showing the total amount withheld for charity, along with the pledge card showing the name of the charity.

    ✓    Prior law allowed taxpayers to back up their donations of money with personal bank registers, diaries or notes made around the time of the donation. Those types of records are no longer sufficient.

These IRS tips are good reminders to your donors ...
    ✓    Contributions are deductible in the year made (or charged to a credit card before the end of the year.)

    ✓    Be sure the organization is qualified. Check IRS Publication 78, available online and at many public libraries.  Churches are eligible to receive deductible donations, even if they are not in Publication 78.

    ✓    For individuals, only taxpayers who itemize their deductions on Schedule A can claim a deduction for charitable contributions. This deduction is not available to people who choose the standard deduction, including anyone who files a short form (1040A or 1040EZ).

Year End 1099-Misc Preparation
The 1099-MISC form is one of the most important tax forms that most churches are required to issue. Yet, many church treasurers are unaware of this reporting requirement, or are unsure how to complete the form. The 1099-Misc-MISC form must be issued to any "non-employee" who is paid compensation of at least $600 during any year, except for corporations.  Again, these forms do not need to be sent to corporations or to employees (since they receive W-2s).  1099s do need to be sent to individuals, sole owners, partnerships and all attorneys and/or law firms.  You may also need to comply with backup withholding requirements (28% of the check amount).

This brings up the question.  How do you know if the organization you are writing a check to should receive a 1099-Misc?

You need to make sure you have a Form W-9 completed by the payee BEFORE you issue the check to them.  Is this a big hassle?  Yes, but we need to do it.  If you have not been getting these forms completed throughout the year this is your chance to get them in place before you begin filling out the 1099's.  It is good to do a quick double check and make sure you did not miss obtaining a form throughout the year.  You will find this form at this website:  http://www.irs.gov/pub/irs-pdf/fw9.pdf

As always, please feel free to contact me, Pam Breen, if you have questions or if we can be of assistance at Pambreen@aol.com or 888-290-2229.