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Showing posts from December, 2019

Why We Give—Thoughts on Year End Giving from a CPA

How do we count our blessings at year end?           
As Certified Public Accountant and founder of MinistryCPA, I challenge us with lessons in counting our blessings at year end that I find I must revisit each December. The missions of more than 100 MinistryCPA charity clients constantly serve to re-center my thinking. Thankfully, early in my career I started a year end pattern of looking back on the past 12 months and looking forward to the next. In addition to the natural reflections you might expect, charitable giving is on my mind. It wasn’t until I was well into my 40s that my vision for giving was expanded beyond simply giving because of a sense of duty. Now I’m much more careful to check and recheck my motivations.
1.We give because we care about the impact of charities       Giving Tuesday, each Tuesday after Thanksgiving in the U.S., is past. But our favorite charity is still counting on us and others to give this December. The leaders, staff and volunteers of the organizations…

Insurmountable Wall for 2019 Charitable Contributions?

With recent law changes, the federal standard deduction now exceeds $12,000 for individuals and $24,000 for married couples filing jointly and grows each year with inflation adjustments. With only mortgage interest, state and local taxes, catastrophic medical, and charitable contribution deductions to accumulate, many families and individuals face a seemingly insurmountable wall to exceed the “free” standard deduction and, instead, itemize their own write offs.
Some have even questioned whether charitable contributions are deductible anymore; however, all is not lost!

MinistryCPA offers four strategies for you to consider as the 2019 calendar year comes to a close.
1. Many state income tax returns do not follow the federal itemized deduction rules. This allows taxpayers to continue gaining a tax benefit for charitable contributions. For example, a Wisconsin taxpayer with $50,000 of Wisconsin income is granted a standard deduction of $6,709 (married filing joint is $14,641). While Wisc…

Interest-Free Loans to a Church

Question:

Could a church borrow from church members at a 0% interest rate? Do “imputed interest” rules apply to such loans? Is there any limitation that a church member needs to be aware of before loaning funds to the church under these conditions?

Answer:

To answer the first question, yes, a church could receive loans from church members with a 0% interest rate. This type of loan is usually classified as a below-market gift loan. In a sense, the church member who is lending the money is transferring an annual amount equal to the forgone interest to the church as a gift. The church, however, simultaneously transfers such interest back to the lender. This is the idea of imputed interest.

Were it not for limitations related to Schedule A itemized deductions, a donor would report equal amounts of the foregone interest as taxable interest income, but enjoy offsetting charitable contribution deduction.

However, an exception to this unfortunate consequence does exist. According to 2018 U.S. Mast…