AboutJohn Stancil, CPA Expertise I can answer questions on personal income taxes, partnerships, and some corporate income taxes. I can deal with some state tax questions. Limited gift and estate tax questions. I am also familiar with ministerial and church tax reporting issues. I teach tax and accounting at a small church-related college. Sales taxes and property taxes are state and local issues so I am not likely be be able to give you an in depth answer on those types of taxes. I have maintained a part time tax practice for over 30 years. I am a member of the AICPA, National Society of Tax Professionals, and the Institute of Management Accountants.
Experience I hold a doctorate in Accounting, and four professional certifications: CPA, CMA, CFM, and CIA. I passed all certification examinations on the first attempt, and received honorable mention for my scores on the CIA exam. I write a monthly tax column for the local newspaper.
Expert: John Stancil, CPA Date: 7/18/2008 Subject: Church Tax Deductible
Question QUESTION: We have a issue that keeps coming up at our church that i would clarification. We have a senior group called "Rejoicing Hearts." There is a line item in the Budject by that name and a certain amount is set aside each year for us to use but it is not enough to take us through the year mainly because we get outside entertainers to come in. Some of us in the church have been giving donations and marking it for the senior fund "entertainment". There is some concern as to whether these donations are tax deductible or not. If not, how can a check be made out to make them tax deductible. Please give your response in "Baby Jane" lanquage where my grandma can understand it. Thanks.
ANSWER: Raymond,
Thanks for your question.
Since the "Rejoicing Hearts" are a ministry of the church and a part of it "exempt function," contributions earmarked for it are tax deductible.
Hope this helps.
John Stancil, CPA
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QUESTION: Thanks so much for your answer it really helps. I do have a follow on question. Does the church have to keep a complete record of the use of the donated monies given for "entertainment" or any other purpose to this "Rejoicing Hearts" line item like they do a Benevolence Fund outlay. If not can it be used at the discretion of the "Rejoicing Hearts" Officers to support it ministries.
ANSWER: Actually, it would be best if the funds were just given to the "Rejoicing Hearts" for use as needed. If it were designated specifically and only for entertainment, there could be IRS problems.
John Stancil, CPA
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QUESTION: Thanks again. I assume the reason that there may be a problem with this because the funds desiginated for Entertainment could possibly be used for something other than "Entertainment" and that cause an IRS problem. Is this a true assumption? So does the church have to keep detail records of the outlay like they do a Benevolence Fund,e.g. establish a procedure for disbursement of the fund approved by the Board before outlay. The reason I am asking this is because many times I take money out of my pocket to pay entertainers as well as other expenses and the church subsequently reimburses me. This is done because takes the accountant some times a week or so after the event to react. I just need a little more insight if you could furnish. Thanks so much for your time and knowledge sharing.
Answer Actually the problem is that if the funds are designated as entertainment, there could be an allegation that the contribution was a payment to see the entertainment, hence a direct benefit was received and the contribution would not be fully deductible.
The church should have some control and record of the expenditures. You should likely get the expenditure approved in advance, depending on the policies in your church. When you pay them out of your pocket you should get a receipt which could be presented to the church for reimbursement.
