It's New Years Eve in my time zone, but New Years Day in the time zone of the charity I donated to. Which year's taxes do I record my contribution?

Question

I decided to make a last minute donation to a charity I care about. At the time of the transaction, it was 31 December 2016 in my time zone. But the charity I donated to is headquartered (and does all its operations) in a time zone where it was 1 January 2017. Which year do I record this charitable contribution on my taxes if I am seeking a tax deduction?

In my specific situation, I paid through PayPal and have receipts with both dates: the PayPal receipt has 2016 on it and the charity's receipt has 2017 on it.

Conversely, if I live in a time zone where it is 1 January 2017, but I donate to a charity headquartered and/or operating in a time zone where it is still 31 December 2016, which tax year do I put this on?

Answer 1

The IRS rules for the charitable contribution deduction are in IRS Publication 526.

Pub 526 has a section called "When To Deduct" that explains the details of placing your donation in a specific tax year. First, the general guideline:

Time of making contribution. Usually, you make a contribution at the time of its unconditional delivery.

After this statement, it gives some details for specific types of payments. Some of them that might apply to your last-minute donation are:

Checks. A check you mail to a charity is considered delivered on the date you mail it.

Text message. Contributions made by text message are deductible in the year you send the text message if the contribution is charged to your telephone or wireless account.

Credit card. Contributions charged on your bank credit card are deductible in the year you make the charge.

Pay-by-phone account. Contributions made through a pay-by-phone account are considered delivered on the date the financial institution pays the amount. This date should be shown on the statement the financial institution sends you.

For checks and text messages, it seems to me that the time you would use would be the local time when/where you send it.

For a credit card donation, local time would also probably apply, except that your credit card donation receipt is your proof that you donated, and you probably should use the time/date on the receipt.

For pay-by-phone account, the guidelines specifically state that you need to use the date on your statement.

Remember that your cash donation must have a record to substantiate it in order to be deductible: either a bank record, a receipt from the organization, or a paystub (if donated by payroll deduction). You are safest if the tax year you choose matches your record.

Answer 2

I asked a related question last year about which tax year to report income in. The answer to that question hinges on the concept of "constructive receipt" which means you cannot "choose" which year you prefer; you must include income in the year in which you reasonably could have received it. Along similar lines you shouldn't be able to "choose" which year you take a deduction, and therefore I believe the official answer would be that it should be deducted in the year it occurred from your point of view, not the charity's.

That being said, this is definitely an edge case since if you "choose" 2016 you can provide a PayPal receipt, and if you "choose" 2017 you can provide the charity's receipt. Even though you shouldn't be able to "choose", I believe in this case you probably can, and either option would be considered reasonable from an auditor's point of view since you have sufficient documentation for both years. Just don't deduct it both years!