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Showing posts from 2023

Are gifts to employees taxable?

Question: Are gifts to employees taxable? Answer: Almost every year, we receive this question or one similar to it. The end of the year and holiday season is a common time for employers to do something special for their employees, and the special treat normally comes in the form of some type of gift or bonus. In an employer's best efforts to avoid increasing their employee's taxable income, it is possible that IRS rules are being broken regarding the taxability of the gift. To determine the taxability of the gift, there are a couple of factors to keep in mind.  1. Is the gift cash or a cash alternative? If it is, then the gift would be viewed as compensation by the IRS. Cash alternatives include items such as gift cards, gift certificates, and other replacements that can be redeemed for some type item with a monetary value.  2. Would the item be considered a de minimis fringe benefit by the IRS? De minimis fringe benefits are benefits that the employee receives as part of their

Top 10: Questions New Treasurers Ask MinistryCPA

  This is another posting in the MinistryCPA Top 10 series: Being the treasurer can be a big task, especially when you are new to the position. There are many different aspects of church finance, from internal financial reporting to church payroll. Today we are going to cover 10 questions that we receive from new treasurers.   1. How do I create a budget? Budgets are largely based on the previous year’s performance. Budgets should be created with the help of old financial statements as well as people who will be using the funds. A budget committee can be formed from church members, board members, and pastors to help plan what the church will require for different ministry expenses. These numbers can then be put into budgetary financial statements to help show the financial position of the church at the end of the year. 2. What policies should be in place to protect people in the ministry regarding cash receipts and disbursements? Cash receipts is an area that needs to be carefully moni

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

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 .