When Is Charitable Contribution By Check Deductable?

Hi,

We made a charitable contribution, by check, in mid-December,

  1. The organization received it before the end of the year but didn't cash it until January of this year. Is the contribution deductable at the time it is written, received, or processed by the bank?

Thanks, Gary

Reply to
Gary Brown
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You take the deduction based on when you send the check to the charity, regardless of when they cash it.

A more interesting question, to which I'm not sure what the answer is, is what happens if, after you've filed your return, the check is subsequently never cashed? For example, what if the charity goes defunct or decides for some reason that they don't want your donation and returns it or your check bounces?

Reply to
Jonathan Kamens

Then you have a recovery, report on Line 21 Other Income if your deduction was equal to your Schedule A deduction (i.e. you didn't take the standard deduction).

Reply to
removeps-groups

A secondary hassle for me is that my primary database for all my financial information is a set of Quicken accounts; and so each year I prepare worksheets listing and totaling various categories (like donations, consulting income, various expenses categories) in the form of Quicken reports, which I then attach to my tax preparer's annual questionnaire.

So, this donation, though it may be deductible in 2009, isn't entered into the relevant Quicken account (which is reconciled against the relevant monthly bank statements) until Jan 2010, and will only show up in my 2010 worksheets (hard to make Quicken reports work in any other fashion).

Either have to remember to make "hand corrections" on the printed Quicken worksheets (for both years), or just count it as a 2010 donation. I usually do the latter -- though can't do this with occasional late-2009 income items where the income is on a 2009 Form

1099, but doesn't reach my bank until early 2010.
Reply to
AES

If the worksheet is dated January 2010, but shows expenses relevant to 2009 taxes, with the dates for those expenses in 2009, include the worksheet with your 2009 tax records. If it also shows expenses relevant to 2010, also include this same Januare 2010 worksheet with your 2010 tax records. When preparing taxes, break down the contents of the worksheet and group the relevant expenses into the appropriate tax year.

Do not decide that the entire worksheet applies to one tax year if it has expenses for two tax years!

A separate question is whether an annual printing out is adequate record-keeping practice, or whether you should do so more frequently. The longer the records are not on paper, the more strictly you may be held to rules regarding electronic record-keeping.

Steve

Reply to
Steve Pope

Well, if you recorded the check in Quicken at the date it was written or mailed, it should show up in reports for that year, not the year the check clears the bank.

I have the same issue with those dividends paid in January but attributed to the prior year. What I do in that case is to record a "$0" entry on the actual payment date with a memo referring back to the 12/31 entry for that dividend. that gets the dividend in the correct tax reporting year (but maybe that's just an accountant wanting the file to be exactly right!).

Reply to
Tom Healy CPA

I do something similar w/ Quickbooks for the farm income/expenses but either fudge the date to put it into the proper calendar year for the reports and later correct it for reconcilation or, for things like quarterly estimates paid set up a custom report date period for that specific account...

Reply to
dpb

Thanks for this and various other replies.

The core conflict here of course arises because most of the paper financial records one receives from outside (bank statements, credit card bills, etc) are organized on a monthly basis; and I at least like to have the date of each item in my Quicken accounts match the related paper document at least at the 'month' level.

For tax purposes, however, this occasionally puts the item in the wrong tax year, requiring either 'fudging' the date as above, or making a special note in the Memo field that the Quicken item date is in the wrong tax year, or some kind of triple-entry dodge.

Either way, it's a "hand correction" which slightly complicates the Quicken record keeping and reporting process. Don't see any easy way around this; fortunately the number of such items is typically small.

Reply to
AES

AES wrote: ...

I end up there after the tax season, yes...

While getting OT for m.t.m, I'll venture that altho I don't know Quicken, the only way I see in QB would be to either use a Class field that coded the tax year of every transaction that could be then used to filter reports. That, of course, creates the issue of having to do it on every entry to be useful and so the hand munging on a few items is simpler/quicker in the long run.

If one were trying to rely on it as a "real" electronic records system that wouldn't fly I don't suppose but in this instance there's hard copy that is the actual record if it ever came to needing proof; the QB entry is simply a handy codification/summation tool.

Reply to
dpb

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