End of Year Contributions

Posted by Alan on January 5, 2011

Is the end of the year the end of your year? We get questions like this all the time:

Question — The end of our fiscal year is December 31. Our offices our closed from December 31 through January 3rd. If funds are sent on or before December 31 but not received and deposited until after January 3, do those funds get credited for the previous fiscal year as a donation?

Answer — You should set a cut of date in January for when you start recording gifts as 2011 rather than 2010. A week to ten days in is usually sufficient. If funds are sent prior to 1-1-11 (I prefer to use the post mark on the envelope as a guide rather than the date on the check) I would definitely honor those as a 2010 contribution.

You would record those as 2010 income even though you deposit them in 2011. In QuickBooks, you would list each of the checks as a sales receipt and date them for the appropriate December date and have the funds go to Undeposited Funds (you may have to create or activate that account). Then record the bank deposit of those funds on the day they were deposited. The income matches the donor intent and your checking account will reconcile up nicely to the bank statement. Then all you have to do is get the donor thank-yous out so they can prepare their tax returns.

Other ideas out there? Questions? Ask them or tell us in the comments below or send us a message.

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More Charity News

Posted by Alan on December 16, 2010

Beyond the rate changes the IRS had a couple of other announcements:

  • The 990 filing thresholds change with the new year and move to the permanent levels, the phase-in process for getting nonprofits ready to file the updated form 990 is over. Now organizations with $200,000 or more in gross income (or more that $500,000 in total assets) will have to file the full form. Click here for the full 2011 chart.
  • The IRS announced that it has released final guidance for small employers, including nonprofits, eligible to claim the new health care tax credit for the 2010 tax year.
  • Want to know what the IRS is up to next year? They have just published their Priority Guidance Plan and it lists the areas that they are continuing to focus on and work on that impact nonprofits. You’ll have to dig and search a bit if you want to details, but I always think it is nice to know what the IRS is up to with regards to charities.
  • Want to know how 2007 treated charities? A Statistics of Income Bulletin that covers tax exempt reporting from 2007 has been released. Interesting data on the number of filing organizations and their areas of service, program spending, etc.
  • For the real IRS and Charity wonks out there, as if the last two links were not bad enough, we have my favorite piece: The Fiscal Year 2011 Tax Exempt Workplan! (opens a PDF) This report lets us know what the Tax Exempt & Government Entities section of the IRS will be doing and how it might affect us. My Christmas break reading.

In other, non-IRS News:

This is the last entry for 2010, a big thank you for reading and see you next year!

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2011 IRS Mileage Rates

Posted by Alan on December 6, 2010

The Internal Revenue Service has announced the 2011 Standard Mileage Rates. From their press release:

Beginning on Jan. 1, 2011, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

  • 51 cents per mile for business miles driven
  • 14 cents per mile driven in service of charitable organization
  • 19 cents per mile driven for medical or moving purposes

Click here for the full press release and more information.

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Questions and Answers

Posted by Alan on November 18, 2010

During a recent workshop on the form 990 there were a couple of questions that came up that I said I would get more information on.

Reporting In-Kind Income

On the form 990 you do report non-cash contributions in Part VIII, Statement of Revenue. The IRS considers non-cash contributions to be anything “other than cash, checks, money orders, credit card charges, wire transfers, and other transfers and deposits to a cash account of the organization.”

This definition does not include donated professional services and facilities. The organization can only report the amount of any donated services, or use of materials, equipment, or  facilities in Part III, Statement of Program Service Accomplishments for each program that this is appropriate for.

This also goes for 990EZ filers, Part III of that form is where you would describe donated services and the like.

Government Revenue

A question was asked where payments from the government (either Federal, State or Local) should go in Part VIII, Statement of Revenue. What a government entity calls a grant may feel like fee-for-service work to the nonprofit, so does it go in line 1E under Contributions or under line 2, Program Service Revenue?

Where the money goes depends on who benefits. Did the work only benefit the government agency that gave you the funds? If “yes” then it goes on line 2. If the answer is “no” because it benefits the general public  then it gets included on line 1E. Per the 990 instructions:

The payment is recorded on line 1e if the general public receives the primary and direct benefit from the payment and any benefit to the governmental unit is indirect and insubstantial as compared to the public benefit.

If I missed any questions or you have others please let me know.

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