Year End Donation

Tina Grewe

I had a situation at year end and I want to know what is the best way to handle it in RE. We had a donor that overpaid on the final pledge payment - part of the final payment came from the donor's business and the balance from the donor. The donor dropped off both checks on 12/23 in the afternoon and then left town for the Christmas Holiday.  The checks were deposited in the bank electronically.  Upon posting the checks in RE it was discovered that the personal check created an overpayment.  The donor was contacted (took several attempts as the family was out of town) and decided that they wanted the overpayment to be applied to 2017.  So, the issue is we have one check that the donor wants split between two tax years and the check was deposited in 2016. 


I think what I should have done for RE purposes, was to split out the check - the amount that was needed to pay off the balance of the pledge would be posted in 2016 and the amount that was the overpayment would have a post date of 2017. I hope to not have the situation arise again, but if it does and we have a donor that wants to split one check between tax years - should the post date be the key to getting the amount in the correct tax year? I had asked support the question and she agreed with the above process, but suggested that I ask the Community to see if others have had this situation and how it was handled.  Thanks for your time!

JoAnn Strommen

In my opinion and I think I'm stating it as the IRS would see it,

If the gift was made in 2016 the gift hits 2016 tax year.  Just because it's applied to a 2017 fund or pledge as far as taxes are concerned it's the date of the gift. You can't start playing around with splitting one gift between two years for tax deduction purposes or you'll find yourself in trouble. I have a donor who made a five year pledge but then a few months later paid the complete pledge.  While his gift went in several different funds in RE, his receipt was for one gift received in 2015.

If you run separate funds for each calendar year you can make an adjustment to the gift resulting in a split gift between the two funds.  Before you do that if you are integrated with your accounting software, talk to them so they know what is happening, especially if they've closed out the books for fiscal year 2016. You can apply the gift to split funds in RE but that is a separate thing from two 'tax' years.