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Tax deductible amount for recurring commitments

  • 1.  Tax deductible amount for recurring commitments

    Posted 12 days ago

    Hi, all.

     

    I'm looking for a confirmation on how to handle receipting for a recurring gift with a premium that crosses a calendar year.

     

    Here's the scenario: 

    1. Donor makes their first gift to the organization, a $50 monthly recurring contribution in December 2020.
    2. Donor receives a premium in December for with a fair market value of $75. 

     

    Question: Should the tax deductible amount of the 2nd installment of the recurring contribution (in January 2021) be $50 or $25? Or, put another way, should the $25 of FMV that is not "used" to negate tax deductibility for 2020 get passed over to 2021 or not? 

     

    I'm pretty sure I know the answer, but would love to make sure we're doing what would be commonly expected.

    Thanks for the help!

     

     

     

    EveryAction

    Belinda Rawlins (she/her/hers)
    Senior Product Manager
    everyaction.com

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  • 2.  RE: Tax deductible amount for recurring commitments

    Posted 12 days ago
    My assumption is that the premium being given is based on the total amount of the contribution.  That being the case - even if you are giving the premium away "early," I would reflect the reduction in your annual receipt for next year.  Note that I suggest an annual receipt.  For recurring donations, I urge sending just one receipt a year for the cumulative amount.  Not individual receipts for each payment.

    John

    John H. Taylor
    Principal
    John H. Taylor Consulting, LLC
    2604 Sevier St.
    Durham, NC   27705
    919.816.5903 (cell/text)

    Serving the Advancement Community Since 1987






  • 3.  RE: Tax deductible amount for recurring commitments

    Posted 12 days ago
    BTW, here's a print screen from my presentation last week where I covered this and other things the IRS doesn't explain :-)

    image.png

    John H. Taylor
    Principal
    John H. Taylor Consulting, LLC
    2604 Sevier St.
    Durham, NC   27705
    919.816.5903 (cell/text)

    Serving the Advancement Community Since 1987