End of year checks

If I write a check to a charity on December 31, 2012 (dated 12/31/2012) and drop in the mailbox before midnight, does it count as a 2012 deduction, even though the check won't be received and cashed until 2013?

Same question, but this time I don't actually make it to the mailbox until the next morning, January 1st (but the check was still dated and written on December 31st).

Same question, but this time I use an online bank billpay service to issue the check on December 31st. While I go through all the steps to issue the check on December 31st, the bank doesn't actually issue and date the check until, say, January 2nd.

Reply to
RW
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This is my opinion - above a certain amount ($250?) your cashed check is not sufficient proof of a donation, you need the letter from the charity. It's the date of that letter that counts.

On a personal note - I tried to charge a payment to a charity, mid-December. For whatever reason, I saw it never went through, and called the charity. They had a record of the attempt, and on making the donation, their letter gave me the original date for my donation.

My answer doesn't change for billpay. A donation today should either be done in person, or on a charge card if you wish to have it count for

2012. To be clear, I'm not citing any regs on this, only offering opinion.
Reply to
JoeTaxpayer

Yes. It is date of mailing,

No. See above.

For electronic bill paying services or paying by phone, it is the date that the financial institution charges your account.

Reply to
Alan

Not so fast. It's only a 2012 donation if it is postmarked in 2012. Presence of the letter in a USPS mailbox isn't sufficient.

Ira Smilovitz

Reply to
ira smilovitz

of the letter in a USPS mailbox isn't sufficient.

I disagree. You are thinking tax returns. For charitable contributions, it is the date of mailing. Placing the envelope in a post office box before midnight puts the envelope in possession of the US Postal Service. You might have a problem proving when you mailed the check should you be audited, but that is a different issue. I don't recommend this option.

Reply to
Alan

The last time I did electronic bill paying (to a recipient the bank didn't know), the bank mailed a check and charged my account when the check was deposited (just as if I'd mailed a check). Why isn't it the date that the check is mailed, or the charge ordered (or became non-revocable)?

Seth

Reply to
Seth

"Seth" wrote

I get checks from people who "bill pay" and the payment comes out of their account way before I get the check and deposit it. I know this because I've seen it on the client's bank statement. So a bill-pay transaction from your bank account might not land into the hands of the charity till the following year, and if you are expecting that transaction to show up on your prior year charitable statement, good luck with that, as they'll probably record it as it's received.

Reply to
paulthomascpa

My bank's bill-pay has two modes - An instant next day direct payment (i.e. I have to set it up a day ahead, but then tomorrow the transfer is direct and the credit card/utility/etc gets it direct transferred) or for those who are individuals, a check is sent with a few day's time for the mail. My account is not debited at that time, and I currently have one that's clearly stale/lost, over 18 months, and one that's a few months uncashed.

Reply to
JoeTaxpayer

It's highly likely there are three modes.

  1. Electronic transfer through the clearing house instantaneously on the date specified. E.g., you schedule a payment to American Express for Jan. 10th. Your account gets debited Jan. 10.
  2. Electronic check payment through the clearing house. The payee can not accept an ACH electronic transfer but does allow for conversion of paper checks to an electronic check payment. This works just like the first mode, in that your account will be debited on the day you specify as the payment date. It is highly likely, that this will look like an ACH transfer when you login to your account after the process date. The way you can tell the difference between mode 1 and mode 2 is that you can schedule ACH payments for the next business day but you can't schedule electronic check payments until the third business day. Until a payee processes this payment, it looks like you scheduled a paper check to be mailed.

Also note, that checks you actually write can also get processed this way except that the processing won't happen until the payee actually receives the paper check and runs it through its electronic processing machine. If you have an account with a bank that provides images of cashed checks when you login to your account, you won't see an image for a check that was processed by the payee this way.

  1. The classic method of creating a paper check that will not create a debit to your account until it is presented for payment and gets processed through the clearing house. An image of this processed check should be available to you when you login to your account to see what has been cashed.
Reply to
Alan

And a bank with which I no longer do business had another method, wherein they would issue a paper check on my account, and mail it to the payee, but would debit my account on the day they wrote the check -- not on the date it cleared. This was only one of a number of user-unfriendly qualities developed by this bank after they merged/bought-out a very nice-to-deal-with local bank.

Reply to
Ron Rosenfeld

Not sure if this is the bank you're talking about, but I had that exact experience with Wells Fargo when they bought out Wachovia. Like most banks, Wachovia did not charge the account until the payment cleared. Needless to say, Wells charges the account on the day they write the check. Since many recipients don't cash their checks right away, that's a nice little float for Wells.

Reply to
Rick

The following is from the Office of The Comptroller of the Currency. Note the first bullet. As far as I can tell, a bank may not debit your account for a paper check until that bank gets the request from the clearing house for payment. The float belongs to you. Doesn't natter whether you wrote the paper check or asked your bank to write the paper check. Are you sure that the payments you are discussing weren't processed via the second bullet?

What are the different ways my check can be processed now? Remember, the way your check is processed will affect how quickly your check will clear and you have only limited ability to control the way your check is processed. A check you write can be processed in several ways:

- Under the conventional method for processing paper checks, the check you write to a merchant (for example) is deposited by the merchant at the merchant's bank and the original paper check is then shipped from bank to bank. This process could take a few days.

- A new federal law known as the "Check 21 Act" makes it easier for banks to create and send electronic images of paper checks. Even before Check 21, banks were allowed to process checks electronically when all the banks in the process agreed. Under Check 21, any bank may create a special paper copy - called a "substitute check" - using images of the front and back of an original check. If any bank in the process requires a paper check, another bank can send a substitute check in place of the original.

- Under an Electronic Fund Transfer (EFT) process, a merchant or other party (such as a utility company) can change your paper check into an electronic "debit" that is paid from your checking account. The debit may be paid from your account much more quickly than if a check had been processed in the conventional way.

One kind of EFT uses the Automated Clearing House (ACH) network, which a merchant or company can use to convert a paper check into an electronic payment. For example, if you mail a check to your credit card company, the company may convert that check to an ACH payment. The company generally would destroy the original paper version and keep only an electronic image of the check.

Sometimes, a paper check can be turned into an ACH transaction right in front of you. For example, when you write a check at a retail store, the clerk might scan the information from the check, stamp your check "void" and hand it back to you, and then send the payment information to the merchant's bank electronically.

Reply to
Alan

This is from the Wells Fargo FAQ on their online billpay process;

Q: When does Wells Fargo withdraw the money from my Checking Account or debit my Credit Card for a Bill Pay payment?

A: We withdraw the money from your Checking Account or debit your Credit Card on the business day following your payment Send On date. Depending on the payee, your payee will receive the payment within three to five business days.

Reply to
Rick

Change banks.

Reply to
Alan

No, it was a different bank, and I have not done business with them for about ten years (and I think there have been more ownership changes since). The original bank was Bank of NH, and they were an excellent bank with which to do business, for both personal accounts and business accounts.

Reply to
Ron Rosenfeld

If by the second bullet, you mean the Check 21 act, I cannot see how that could be. The bank was sending a paper check, via US Postal service, to the payee. My account was debited when the check was written. On one occasion, the payee never even received the check. The bank even wanted to charge me for a stop-payment on the original check before they would credit the funds back to my account (unless I chose to wait six months).

Reply to
Ron Rosenfeld

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