Properly Reporting Year-End Contributions for Tax Purposes

Generally, checks backdated for December but received in January must be reported with the new year’s contributions.

Church Finance Today

Properly Reporting Year-End Contributions for Tax Purposes

Generally, checks backdated for December but received in January must be reported with the new year’s contributions.

In many churches December is the month in which the most contributions are received. This is easily explained—many donors make large contributions in December to fulfill pledges or other commitments made during the year. But, with the hectic holiday season, many donors end the year without honoring their financial commitments to their church. In some cases, they attempt to do so by depositing a check in the offering during the first worship service in January which they “backdate” to the prior year.

Example. Bob made a personal commitment to give $5,000 to his church in 2002. By the end of the year, he had given only $4,000. While attending church on Sunday, January 5, 2003, Bob writes a check for $1,000 that he “backdates” to December 31, 2002 and deposits in the offering. The church treasurer is not sure if the check should be reported on Bob’s 2002 or 2003 contribution summary.

Should the treasurer in this example treat Bob’s $1,000 check as a 2002 contribution? Many churches advise the congregation during worship services on the first Sunday in January that checks contributed on that day can be credited to the previous year if they are backdated to December 31st of that year. Is this correct? Or, should Bob’s check be treated as a year 2003 contribution? Can the church or donor assign the contribution to either year?

Every church treasurer should be able to answer these questions. Doing so is easy, if you remember the following two rules.

Rule #1: the general rule. The income tax regulations specify that “ordinarily, a contribution is made at the time delivery is effected. The unconditional delivery or mailing of a check which subsequently clears in due course will constitute an effective contribution on the date of delivery or mailing.” According to this language, a check (payable to a church) that is dated December 31, 2002 but physically delivered in January of 2003 is deductible only on the donor’s 2003 federal tax return. This is so even though a donor backdates a check to read “December 31, 2002” during church services in January of 2003. It is even true if the donor actually wrote and dated the check on December 31, 2002 if he or she did not deliver the check until 2003.

Rule #2: the exception. The only exception to the general rule is a check that is dated, and mailed, and postmarked in 2002. Such a check is deemed to have been given in 2002 even if the church does not receive or cash the check until January of 2003.

These two rules are summarized in the following table.

Crediting Year-End Contributions

Type of contributionchurch reports as a 2002 contributionchurch reports as a 2003 contribution
checks written in December 2002 and deposited in church offering in January 2003 X
checks written and deposited in church offering in January 2003 but “backdated” to December 2002X
checks written and deposited in church offering in December 2002 but “postdated” to January 2003X
checks written in December 2002 and deposited in the mail and postmarked in December 2002, but not received by the church until January 2003X
checks written in December 2002 and deposited in the mail in December 2002 but not postmarked until January 2003, and not received by the church until January 2003XX

This article first appeared in Church Treasurer Alert, December 2002.

Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.

This content is designed to provide accurate and authoritative information in regard to the subject matter covered. It is sold with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. "From a Declaration of Principles jointly adopted by a Committee of the American Bar Association and a Committee of Publishers and Associations." Due to the nature of the U.S. legal system, laws and regulations constantly change. The editors encourage readers to carefully search the site for all content related to the topic of interest and consult qualified local counsel to verify the status of specific statutes, laws, regulations, and precedential court holdings.

ajax-loader-largecaret-downcloseHamburger Menuicon_amazonApple PodcastsBio Iconicon_cards_grid_caretChild Abuse Reporting Laws by State IconChurchSalary Iconicon_facebookGoogle Podcastsicon_instagramLegal Library IconLegal Library Iconicon_linkedinLock IconMegaphone IconOnline Learning IconPodcast IconRecent Legal Developments IconRecommended Reading IconRSS IconSubmiticon_select-arrowSpotify IconAlaska State MapAlabama State MapArkansas State MapArizona State MapCalifornia State MapColorado State MapConnecticut State MapWashington DC State MapDelaware State MapFederal MapFlorida State MapGeorgia State MapHawaii State MapIowa State MapIdaho State MapIllinois State MapIndiana State MapKansas State MapKentucky State MapLouisiana State MapMassachusetts State MapMaryland State MapMaine State MapMichigan State MapMinnesota State MapMissouri State MapMississippi State MapMontana State MapMulti State MapNorth Carolina State MapNorth Dakota State MapNebraska State MapNew Hampshire State MapNew Jersey State MapNew Mexico IconNevada State MapNew York State MapOhio State MapOklahoma State MapOregon State MapPennsylvania State MapRhode Island State MapSouth Carolina State MapSouth Dakota State MapTennessee State MapTexas State MapUtah State MapVirginia State MapVermont State MapWashington State MapWisconsin State MapWest Virginia State MapWyoming State IconShopping Cart IconTax Calendar Iconicon_twitteryoutubepauseplay