New Missionary Finance Tips

[gregwanderson]

Well, I'm not a CPA but I see it this way: When the donor receives a receipt from the church for tax purposes, there is no breakdown of where the charitable donation goes. The donor has a record of the categories for his own record but, even then, there's a specific notice that once the church receives the donation, the church can use it however it wants. So there's really no guarantee that your Fast Offering won't be diverted to something normally covered by Tithing, for example. The breakdown is simply never reported to the IRS. Does the CPA realize this? I think the church has covered itself pretty well and carefully separates charitable funds from non-charitable funds.

If you were making a donation and you could earmark how it were to be spent then there would be a question of whether it's really a proper, charitable donation. This is why donations to girls camp aren't charitable, for example. But the money which church headquarters charges to the ward each month for each missionary is NOT the real amount of money it takes to support those missionaries each month. It's simply the money that the church demands, again from the ward. Officially, the responsibility is on the ward and NOT the families that donate to the ward missionary fund. So, again, this is not really an earmarked donation.

Again, I'm not a CPA but, in this case, I think the CPA is giving bad and/or not-fully-informed advice.

[aebrown]

IF the donation is made under a general category -- it enjoys full protection--one level down i.e. name specific missionary -- same tax protection is not insured.

I am not a tax professional; the donor in question should certainly make his best decisions based on competent advice.

However, the Church was very careful and consulted with the U.S. Internal Revenue Service in the way it set up the equalized contributions system. What the donor's CPA says is certainly true if the donations were going to directly support the actual missionary, but that's not what is happening here.

• The donations are nonrefundable;
• The missionary will get supported regardless of whether there are any donations credited to the subcategory
• The amount of support the missionary receives is dependent on the costs where he serves, not on the amount of any donations made to his subcategory.

All those factors create enough separation that there should be no problem with these donations being tax-deductible (repeating again my disclaimer that donors should rely on competent professionals).

[russellhltn]

was approached by a member who's son entered the MTC Mexico yesterday.

I don't know if he's on the equalized system or not.

was informed by his CPA that donations directed specifically as subcategories i.e. in the "name of the individual missionary" as opposed to the higher lever "general missionary fund" would not receive similar tax consideration .... Our collective judgment -- based upon discussions--is contrary i.e. it would not matter if general or particular by category. Can you advise? Thank you!!

We're not in a position to give legal advice. I believe the church does put all donations made to a subcategory on their year-end tax statement. I don't want to dis this guy's CPA, but I'm pretty sure the church has consulted some good tax lawyers before adding those donations on the form.

Again, I can't give legal advice, but I can point out a few facts that might be germane to the situation:

• For all missionaries on the equalized system, the payment is the same - regardless of actual cost. Everything is pooled at a higher level.
• If the donations fall behind, the missionary isn't sent home.
• Donations made can't be refunded - even if the missionary is sent home early.
• It's actually the funding ward that's on the hook, even if generally it's the family that pays that. Nothing happens to the family if they fall behind.
• The subcategory with the missionary's name is to help the ward track the situation as they may have multiple missionaries out with different lengths of missions and different end-of-mission dates.

This might be thinner ice than the CPA is comfortable with, but I think the church would suggest that the ice is sound, none the less.

If it would make the CPA feel better, if he sends in his donation via check, the payee will be the name of the ward and the donation slip will only have "Ward Missionary" as the category. It will be the ward that assigns the sub-category. There is no labeled box for the name of the missionary. (The on-line donation system will force him to select a name, so that may make his CPA less comfortable.)

[eblood66]

(The on-line donation system will force him to select a name, so that may make his CPA less comfortable.)

Although you can select a missionary in the online system, you can also select 'Ward Missionary Fund' instead of a specific missionary.

[russellhltn]

(The on-line donation system will force him to select a name, so that may make his CPA less comfortable.)

Although you can select a missionary in the online system, you can also select 'Ward Missionary Fund' instead of a specific missionary.

Ah, so you can. You can even donate to the "Ward Missionary Fund" for another ward.

[gregwanderson]

Either way, the receipt you use when filing taxes has no breakdown at all. It just lists the totals of charitable donations. No categories. No sub-categories.

[eblood66]

Either way, the receipt you use when filing taxes has no breakdown at all. It just lists the totals of charitable donations. No categories. No sub-categories.

Actually, it does have a breakdown. I just generated mine online for last year's contributions and it shows the breakdown for Tithing vs. Fast Offerings. I didn't have an Ward Missionary contributions so I can't say for certain but I expect it shows the total for Ward Missionary as well. But I'm sure it doesn't show specific missionary sub-categories.

[russellhltn]

Actually, it does have a breakdown. I just generated mine online for last year's contributions and it shows the breakdown for Tithing vs. Fast Offerings.

Year-to-date does have a break down, but I think you'll find the tax statement does not. IIRC, it just lists dates and amounts.

Edit: I take that back. The on-line system does break down tithing and fast offering totals. We'll have to see what happens with ward missionary.

[aebrown]

Year-to-date does have a break down, but I think you'll find the tax statement does not. IIRC, it just lists dates and amounts.

Incorrect.

I didn't have an Ward Missionary contributions so I can't say for certain but I expect it shows the total for Ward Missionary as well. But I'm sure it doesn't show specific missionary sub-categories.

Correct. I did have Ward Missionary donations for a specific missionary, and although the Official Tax Statement generated on the Online Donations site does show how much I donated to each top-level category, it does not list any subcategories -- there's just a total for Ward Missionary Fund for the year.

[gregwanderson]

I take that back. The on-line system does break down tithing and fast offering totals. We'll have to see what happens with ward missionary.

Well, that's new. It almost seems like a bug, really, but the statement is designed so specifically to include it now (so it must be a new "feature". Sometimes, out here in the user world, "bugs" and "new features" are hard to distinguish from each other. ) But it makes me wonder what a good, old-fashioned tax receipt printed by the ward's computer from MLS looks like today.

EDIT: It's also interesting to me that the online system can print my tax receipts for 8 previous years, which is more than the ward's MLS software will retain. And I can't print a tax receipt for the current year.