Q&A: Receiving Credit Card Donations

When are contributions made using a credit card receiptable?

Some members of our church make charitable contributions using a credit card. When are these donations receiptable? On the date the charge is made? The date that the donor pays the credit card statement? Some other date?
The general rule is that when a deductible payment is made with borrowed money, the deduction is not postponed until the year in which the borrowed money is repaid. Such expenses must be deducted in the year they are paid and not when the loans are repaid. Accordingly, a taxpayer who makes a contribution to a qualified charity by a charge to the taxpayer’s bank credit card is entitled to a charitable contribution deduction in the year the charge was made and the deduction may not be postponed until the taxpayer pays the indebtedness resulting from such charge.
The current edition of IRS Publication 526 (“Charitable Contributions”) confirms this conclusion by noting that “contributions charged on a donor’s bank credit card are deductible in the year the donor makes the charge.”
Of course, in order to substantiate a charitable contribution, a donor must maintain adequate records to show that the contribution was made. For contributions by credit cards, which are considered similar to a cash contribution, you must keep the credit card statement that shows the name of the charitable organization, the amount of the contribution, and the date of the contribution. Additional requirements apply to any individual charitable contribution (including by credit card) of $250 or more. Generally, these contributions can be substantiated only with a written acknowledgement from the donee charity that meets certain requirements.
Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.

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