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Card Fees
Hello, I’m looking for guidance on card transaction fees. I’m finding mixed information. If a donor covers fees, is that included in the tax deductible amount? Some info seems to say: No, because your org did not receive that money. Some seem to make it sound almost like in-kind donation, as they are covering a cost you would otherwise incur. Our accountant said, not deductible, but didn’t seem 100% confident in saying that.
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3 Replies
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We treat it as 100% deductible donation and then we allocate the funds between the fees paid and the donation part. You can treat the amount paid to cover costs as a restricted donation.
Here is another take – https://fundraiseup.com/support/tax-deductible-fees/
fundraiseup.com
Understanding fee coverage and tax deductibility | Fundraise Up Knowledge Base
When supporters make contributions through Fundraise Up, they may have the option to cover the platform and payment processing fees associated with their donation. This feature, known as "Transaction costs...
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Look at it another way, if you were the person donating, would you consider it a $100 donation you made on your taxes or $105? What does their receipt say through the portal? $100 or $105? Besides, is it a true donation or an event kind of thing? There are a few layers to the onion for us. Generally, anything they are “charged” that is not the net we receive, I put to fees as well. So you gave me $105 unrestricted funds, but the deposit transaction is $100 as I post the $5 fee to a donation fees account charged to unrestricted. I think I may be shooting an email to my auditor, though. I never thought of considering it an in-kind before. Still feels like it is more appropriately an “overhead’ cost.
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Our records indicate that the full intended amount, including any add-on fees, is reflected in our receivables. The entire merchant/credit card fee is accounted for as an expense.
Please remember that your merchant will include the full amount received from your donor in the 1099-K form at the beginning of next year.