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Treatment of Online Giving and Processing Fees

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Question: 

How should a church record online donations in the following situations? Additionally, what amount is the donor allowed to deduct as a charitable contribution?

1.) The processing fee is deducted from the donor's gift. 

2.) The donor pays the additional processing fee.  

Answer:

1.) The processing fee is deducted from the donor's gift.

            For example, an individual gives $100 to the church and the payment processing company charges a $3 processing fee. The church will receive the net amount of $97. We recommend that the church record the full amount of the gift, $100. The church will then record an expense to account for the $3 processing fee. The donor receipt will reflect the gross amount ($100), which is the amount deductible to the donor as a charitable contribution.

2.) The donor pays the additional processing fee.  

            In this case, the donor donates $100 to the church and pays the $3 processing fee. The church should simply record the $100 donation in this situation. Furthermore, the donor can deduct $103, which includes both the $100 donation and the $3 processing fee. 


For more information on Online Giving, see...

Three Things to be Aware of When Establishing Online Giving Procedures


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