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Are gift card donations tax deductible?

Question:  A church received a large donation of gift cards for a specific local restaurant to be used as part of the benevolence fund. Can those church members that donated the gift cards receive a tax deduction? Answer: A gift card is considered a cash equivalent, so it should be treated as any cash contribution to the church would be treated. The contribution would still be tax-deductible to the donor and the donor should still receive a receipt for their donation at the end of the year.  The only difference is in how the donation is recorded in the church accounting software. The gift card does not go into the bank account since it is not cash, instead a separate asset account would need to be established to track the gift cards on hand. The gift card would normally then be recorded as income, or in this case an increase to the benevolence fund.   If you would like more information on some additional nuances that come with gift card donations you can see our other post on this topi
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Secure Act 2.0- retirement changes galore

In 2022 the Secure Act 2.0 was approved for implementation over the next few years. The act has several changes that are designed to greater incentivize saving toward retirement. We wanted to provide a concise breakdown to highlight the sections that will have the greatest impact on the average person.  Saver's Credit Over the years a tax credit has been available for individuals that contribute money to their IRA, Roth IRA, 401(k), or ABLE account while in a lower tax bracket. The tax credit is being changed so that it is no longer a cash refund to the taxpayer, but rather a deposit into the retirement fund of the taxpayer's choosing. The credit is a 50% match up to $2,000 per individual and is phased out between $41,000 and $71,000 for married filing joint taxpayers. This change will be implemented after December 31, 2026, and the current retirement savings credit will remain in effect until then.  529 Plan to Roth IRA Conversion Starting in 2024 individuals who have maintain

Delayed Implementation of $600 threshold for 1099-K (Venmo, CashApp, PayPal, Etsy, etc.)

In 2022 the threshold for reporting payments received through a third-party platform (Venmo, PayPal, CashApp, etc...) was reduced from $20,000 to $600. However, on December 23, 2022, the IRS announced that the decreased threshold would be postponed until the 2023 tax year. The change was delayed until 2023 in order to provide payment platforms more time to implement this into their systems to ensure accurate filing of Forms 1099-K.  The big question is "Will this affect me?" If you sell goods or services and use third-party payment services to receive money, then you should expect to receive a 1099-K that reports your income to the IRS. This is not a change in how taxes are assessed since the income is taxable even if no 1099-K was received in the past, but instead is a change in how the money is reported to individuals and the IRS.  If you do not sell goods or services on a third-party payment service and all your transactions are for reimbursements or personal gifts, then y

2023 Standard Mileage Rates

  The IRS has issued 2023 standard mileage rates. These rates begin on January 1, 2023, and apply to the use of a car, van, pickup or panel truck. 65.5 cents per mile for business miles driven (up from 62.5 cents during the second half of 2022). 22 cents per mile for medical purposes (up from 18 cents in 2022). 14 cents per mile driven in service of charitable organizations (no change from 2022). More information is available on the IRS's  website .

4th Quartile—Your Christian Ministry in Your 60s and 70s

  4 th Quartile—Your Christian Ministry  in  Your 60s and 70s By Corey A. Pfaffe, CPA, PhD Principal of MinistryCPA, a Wisconsin-based CPA firm  Psalm 90.10 – “The days of our years are … if by reason of strength … fourscore years.” “Retire early” they say. But you say, “I’m not done yet!” I’m with you on that one and so are a lot of chief executive leaders of Christian ministries (and Christian business owners, as far as that goes). We’ve taken reasonable care of our physical bodies. We’ve been advancing a rewarding cause we feel strongly about. And we want to develop others to continue and multiply what we’ve started—for their own benefit and for the benefit of the constituencies we serve. A man who knew a lot about advancing a cause and developing another to carrying on a vision that had possessed him for 40 years, wrote: “The days of our years are … if by reason of strength … fourscore years.” That’s right, Moses is the psalmist who recorded these words. Of course, his 120 years w

1099-NEC vs 1099-MISC- When should they be used?

In 2020 the IRS changed the types and format of Form 1099. Before 2020, non-employee compensation was reported on box 7 of Form 1099 Misc. When the change took effect, box 7 was changed to a single question and non-employee compensation received its own 1099. In this post, we will explain the different situations in which each 1099 may be used. It will not be a complete list, but it will give some context to the usage of the different forms.   1099-NEC Form 1099-NEC is used when reporting payments made to a freelance or contract worker who is not an employee of the company. Form 1099 does not need to be filed for every contractor, only the ones that were paid $600 or more during the year. Form 1099 also is not needed if the contractor is arranged as a corporation. Since the person is not an employee, the organization does not withhold any taxes from their pay. The form should be filed with the IRS and sent to the individual by January 31st.  To fill out the form the organization should

Top 10: Factors to Consider when Onboarding Church Employees

  This is another posting in the MinistryCPA Top 10 series: When integrating new employees into a church, leaders can become overwhelmed with the onboarding process. In churches, several different factors need to be considered on the first day of work, as well as some information that should be communicated to the employee. We have compiled a list of some of the factors that a church should consider when hiring and onboarding a new employee.   1. Clear communication about job expectations When onboarding new employees it is vital that they understand their responsibilities and learn about the church. Giving the employee a job description can be a great help to them. Having clear information about their job responsibilities as well as clear descriptions of their co-workers' jobs can help the new employee understand who to go to in different situations. For example, a new church bookkeeper may not know if he or she is supposed to collect information for payroll. The pastoral role wou

Form 941 and 944 Overview

Forms 941 and 944 are both used to report payroll expenses and taxes to the IRS. The forms include information such as total wages paid, number of employees, income taxes withheld, group term life insurance, sick pay, tips, Social Security taxes (employer and employee portions), and Medicare taxes (employer and employee portions). These forms report the total liability that the employer owes to the IRS. Both forms have the same purpose, but there are a few differences.  Even though the forms are used for the same purpose, there is one main difference. Form 941 is filed quarterly and is the standard payroll reporting form that employers use. Form 944 is filed annually and can only be filed by employers who have less than $1,000 in payroll tax liabilities.  If your organization... Has employees Has more than $1,000 in Federal Tax liability (Federal income withholdings, Medicare, and Social Security) Has not received permission from the IRS to file Form 944 Then you should file Form 941 q

2023 Tax Adjustments for Inflation

 The IRS announced on Tuesday, October 18 that several tax provisions would be changed for the 2023 tax year due to the high levels of inflation. The adjustments will be applicable in 2023 and relate to returns filed in 2024. There many changes, but we will cover the changes that apply to the majority of taxpayers.  Adjusted 2023 Tax Brackets Single < $11,000: 10% $11,000 - $44,725: 12% $44,725 - $95,375: 22% $95,375 - $182,100: 24% $182,100 - $231,250: 32% $231,250 - $578,125: 35% > $578,125: 37% Married Filing Jointly   < $22,000: 10% $22,000 - $89,450: 12% $89,450 - $190,750: 22% $190,750 - $364,200: 24% $364,200 - $462,500: 32% $462,500 - $693,750: 35% >$693,750: 37% Standard Deduction Single- $13,850 Married Filing Jointly- $27,700 Head of Household- $20,800 Earned Income Credit The maximum EIC for 2023 will be increased by $495, and appropriate adjustments will be made to all thresholds.  Retirement Account Contributions The maximum contribution limit for retirement a

Can Form 4361 be filed after the deadline?

Question:   Is it possible to opt out of Social Security after the 2-year deadline? Answer:  Unlike other employees, a licensed or ordained minister has the option to opt out of Social Security and Medicare (FICA). If a minister wants to opt out they must file Form 4361 by the tax deadline including extension, in the second year in which they have received ministerial income of $400 or more. This election is final, and the minister cannot opt back into FICA taxes.  At MinistryCPA, we have received questions from ministers who have exceeded the two year deadline and desire to opt-out. There have been several court cases which provide guidance in answering this question. Some have argued that the minister was unaware of the deadline, had mistakenly believed they had filed a timely election, were given incorrect advice by an IRS employee, or their opposition to participate in Social Security and Medicare did not arise until after the 2-year deadline had passed. In each of these cases the