Now that the effects of last year’s tax reform bill are being felt, the proposals to reform the reform keep rolling in. Last month, Sen. Bob Casey (D-PA) put forth a bill to reinstate unreimbursed job expenses. This week, Rep. Richard Nolan (D-MN) introduced H. R. 5662, also known as the Volunteer Driver Tax Appreciation Act of 2018.
The purpose of the bill is to amend the Internal Revenue Code of 1986 to equalize the charitable mileage rate with the business travel rate. For 2018, the Internal Revenue Service (IRS) optional standard mileage rates for the use of a car, van, pickup or panel truck are 54.5 cents per mile for business miles driven but a mere 14 cents per mile driven in service of charitable organizations.
After a lengthy process, Congress and the President did what they had to do in late December 2017 to put into law one of the most significant pieces of legislation in decades: the Tax Cuts and Jobs Act (TCJA). The Act put into place a number of provisions that will affect Not for Profit Organizations. Note the following areas of tax impact that the provisions of the TCJA brought in relation to Not For Profit Organizations, as noted in Yeo Yeo:
- Changes the computation of unrelated business taxable income (UBIT) if an organization has more than one unrelated trade or business. It’s possible that more nonprofits will have to pay UBIT. As Nolo explains:
This was a story told to us by another Tax Advisor that we promised to protect their privacy if they shared their story with us and allowed us to share it with our audience. Therefore, we are publishing this under my name and encourage your comments at the end of this blog post.
When one embarks on looking at what might happen with taxes, that path is fraught with many hazards. What a candidate says may not be what is actually proposed. What the elected candidate proposes may be modified or totally shot down by Congress. What Congress passes may not be signed by the President. However, I have my crystal ball and can foresee what the future holds in terms of future changes in taxes. Yeah, right. Unfortunately, that crystal ball is extremely cloudy and I cannot say with certainty what will happen.
College and high school students are frequently utilized by businesses and non-profit organizations as interns. These arrangements can be beneficial to the organization as the organization may get the services and insights from the intern, even though the organization receives no immediate tangible benefit. The intern may benefit by obtaining valuable on-the-job training, an entree into a permanent job, college credit, and maybe a few dollars in earnings. Internships vary greatly. They may be paid or unpaid; for college credit or not for credit; highly structured as in a college program, or an independent arrangement with less structure. Read More
As most people are aware, contributions to qualified not-for-profit organizations can be deducted on your income tax return. In order to get a tax benefit, however, you must have enough deductions to itemize rather than taking the standard deduction.
The IRS has some restrictions and guideline for charitable contributions. First, in order to take any charitable contribution, you must have a receipt from the organization, detailing the amount of the contribution and a statement that you received nothing in return. There is a new rule on this. Previously, any contribution of less than $250 did not have to be evidenced by a receipt. Now, a contribution of any amount requires one. This also means that if you pay the church $10 for a book that you purchase from the church, this is not a deductible contribution, as you have received $10 in value in return. In short, you cannot Read More
It is highly likely that you have recently received a new, updated credit card from at least one of your credit card vendors. If you did, it is almost certainly one of the new “chip-enabled cards.” You most likely are wondering “What is this all about?”
The United States is very late to the game in the chip card market. These have been in use in Europe for a number of years. It is all about security. After the cards were introduced in Europe, there was a sharp decline in credit card fraud. Without getting into too much technical detail, the old magnetic strip cards allowed the retailer to store card data in their systems, making them ripe for data theft. The chip cards, referred to as EMV (Europay, Mastercard, Visa) utilize a process referred to as tokenization to increase security. In lieu of recording the credit card number a one-time “token” number is substituted in the Read More
Under current tax law, a donor may deduct fair market value for certain non-cash contributions of a capital asset to IRS qualified tax-exempt organizations. This provision in the law has been a great benefit to organizations as well as donors.
For example, assume a taxpayer owns a capital asset such as a tract of unimproved land. The land has a cost basis to the taxpayer of $10,000 but its fair market value is $50,000. If this land has been owned by the taxpayer for more than 12 months, he or she gets a deduction equal to the fair market value when donated to an IRS qualified tax-exempt organization. So the taxpayer gets a $50,000 deduction for an asset costing him or her $10,000 and does not pay any tax on the appreciated amount. Read More
Many churches and other non-profit organizations now accept online and credit card contributions. Typically, the credit card transactions can be made through the organization’s website or through a kiosk located within the organization’s facilities. In recent months the availability of mobile pay devices has become more widely available. These devices allow the organization to use smart phones, tablets, or other devices for accepting payments. The most common providers of this technology are PayPal Here and Square. Typically, after signing an agreement with the company, the appropriate hardware will be provided to the organization, giving them the ability to accept mobile payments. There may be a charge for the hardware. And, the organization does charge a fee based on the dollar amounts that are processed. Read More
Do you plan to donate your services to charity this summer? Will you travel as part of the service? If so, some travel expenses may help lower your taxes when you file your tax return next year. Here are several tax tips that you should know if you travel while giving your services to charity.
• Qualified Charities. In order to deduct your costs, your volunteer work must be for a qualified charity. Most groups must apply to the IRS to become qualified. Churches and governments are qualified, and do not need to apply to the IRS. Ask the group about its IRS status before you donate. You can also use the Select Check tool on IRS.gov to check the group’s status. Read More
Last fall we wrote about the increased enforcement of the German Church Tax (German Church Tax Causes Controversy), in particular the enforcement of this tax on capital gains. The tax is levied by the state at 8-9% of the regular income tax for members of certain mainline churches – primarily Catholic and Lutheran church members. This tax is then passed on to the churches for use in their operations and charitable activities. The tax is only levied against registered members of Catholic, Protestant, or Jewish churches. The system does not rely on self-reporting as some churches have gotten rather aggressive against those who are alleged members of the Church but do not report being a member of a church.
As enforcement of the tax has increased, more and more church members are Read More
When a church or religious organization loses its tax-exempt status, the obvious consequences are that donations to the organizations can no longer be deducted by donors. In addition, loss of tax-exempt status means that the organization is subject to federal and state income taxes on its net income. That last statement is not quite as bad as it sounds, though because the tax is on net income, not the gross. Most such organizations tend to spend most, if not all, of their income on programs and infrastructure. Therefore, there would be little or no net income and no income tax to pay.
There are numerous other consequences involved with losing one’s tax-exempt status that can affect the organization significantly. Read More