Are Your Church Contributions Safe for Tax Purposes

Over the years, our Government and the Internal Revenue Service (IRS) have stripped away our allowable deductions for income tax purposes. The supposed reasoning included streamlining the tax code and bringing more revenue into the Government coffers. However, the tax code hasn’t been streamlined or simplified. So, regardless of the revenue, the Government continues to outspend income.

One of the few deductions remaining for the average taxpayer is Charitable Contributions. Churches depend on the money donated to them on any given Sunday to offset their weekly budgets. The generosity of those who contribute is motivated by the fact that they can deduct those gifts from their annual income tax return.

We need to be aware of some issues with all of this said.

Do Not Earmark Donations for Specific Individuals

Private Insurance is a “no-no” for Churches. The Inurement clause states that Churches are not allowed to benefit private individuals. According to Eric Roberts from the IRS, if anyone earmarks a donation for a private individual, the donation will not be permitted.

The Church counting office or Treasurer should have a rubber stamp that declares, “Not for Contribution Credit,” and every donation earmarked for benefitting an individual should be clearly documented as such.

Giving donation credits to individuals who are not authorized may invoke civil and criminal penalties to the responsible parties of that particular Church. Do Not Test the Waters, or Seek to Circumvent This!

Do Not Allow Bartering

A common practice within Church circles is people, especially Church members, w buying items for the Church, donating them, and then wanting contribution credit. This practice may be costly for the Church and/or the individual. Although there are ways to recognize those non-monetary contributions, they may prove costly for the donor.

Do not allow people to purchase flower arrangements to place on the pulpit for Sunday service and then want contribution credit. Do not allow them to buy supplies, equipment, or donate time for contribution credit. Instead, have them donate the dollar amount of the item or supplies they want to give the Church, and then the Church makes the purchase. This may seem a little foolish, but it will protect all parties, and the dollar donation amount (unless earmarked for the benefit of a specific individual) will be an allowable deduction.

If they insist on giving the item, instead of cash, only write a letter describing in its entirety what was donated. Do not place a dollar amount on the letter. Leave any amounts to be determined by the individual and their tax preparer.

Ensure that all donations are classified as Tithes, Offerings, Mission Fund, or Building Fund. Do not think you can slip something by the IRS. They know what to look for on a tax return. Cheating on your donation credit will not reduce your tax liability enough to make it worth you going to prison. “Give to Caesar that which belongs to Caesar,” and you will not have any problems.

How We Can Help

These and other “hot topic” IRS issues are discussed in-depth at our Church Management and Tax Conferences across the USA. After attending one, the Pastor and Church Leaders will have clear direction on what they can and cannot do. Pastor, Church Leader, Do Not Think you can do Church books without the instruction you will receive at one of these conferences.

This is why it is vital for each Pastor and Church Leader to attend the conference nearest them, NOW! Your procrastination may be the downfall of your Church and Ministry. Contact us today to register by visiting or call us at 800-344-0076. You will be glad you did.

Remember, for others, this is a job, but for us “It is A Ministry!”

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