Tax Letters and Relationship Accuracy
It is essential that your back office relationships between the household and the household member are correct in order to produce accurate tax letters. The household needs to have permission over the individual to use the filter of "summarize by household." If you produce tax letters that say "no records found," you will know that you are experiencing this problem. What to do? It is possible to batch clean up permissions on existing relationships between households, spouses and children. This will update existing relationships so that the permissions on those relations are as follows:
- Spouses and partners will get 2-way permission
- Parents will get permission to their children in this household
- Households will get permission to all household members and heads of households
- Parents of children in this household will get permission to the household
- Heads of household will get permission to this household
To batch update permissioned relationships:
- From the Search top menu, select "Find Contacts"
- Select "Household" as the desired contact type, then click Search
- Select "All Records", then select "Update permissions on relationships" from the bottom of the Actions drop down menu, then click GO
- When the process is complete, a message will appear indicating the number of contact records that were updated (since the system will update all household records, the more contacts you have, the longer it will take)
Note: You can also perform this process for individual households by entering the last name of the household to update.
You may sometimes find that a financial type has been incorrectly labeled tax deductible or non-tax deductible or maybe you changed the deductiblity label over the course of the year. The result is that you have contributions that are being reported incorrectly on your tax letters and they need to be retroactively changed. The action "Modify Tax Data" will allow you to fix this problem.
Original Contribution Details: Contribution Amount: $100. "Non-deductible Amount" $100. The financial type was orginally non-deductible, but you recently changed the financial type configuration to be deductible. This action "Modify Tax Data" will change the contribution field "Non-deductible Amount" to 0.
Original Contribution Details: Contribution Amount: $100. "Non-deductible Amount" $20. The financial type was orginally non-deductible, but you recently changed the financial type configuration to be deductible. This action "Modify Tax Data" will not change the "Non-deductible Amount" field. This is because a human being likely filled in the $20 baed on an assumption that the financial type was already deductible.
If you recieved a contribution from a donor who already took a tax deduction on the funds (e.g. an IRA disbursement used to pay for member dues), and you used a deductible financial type but entered the full amount of the contribution as NON-deductible, the "Modify Tax Data" action will set the non-deductible amount to $0. To avoid this situation, est practices dictate using a non-deductible financial type when the full amount of the contribution is non-deductible (e.g. "Member Dues - Non-Deductible") - this will also help to clearly identify any contributions for member dues that appear as non-deductible without thinking that there has been a mistake in recording the contribution. Be sure to update any contributions that fall into this scenario before running the "Modify Tax Data" action to ensure accurate tax letters.
Here are the steps to complete the cleanup action:
- Login to jManage
- Go to Finances/Find Contributions
- Enter in search criteria (we suggest using the date range "previous year") and click Search
- Choose Select All and from the actions drop down choose Modify Tax Data