Second, there are two individual tax provisions:
Charitable Contributions Incentives encourage individuals to contribute
to religious, charitable, and educational organizations by creating a
new “above the line” deduction. This deduction will permit them to
deduct up to $300 of annual monetary contributions and is applicable
for tax years beginning after 2019 and does not sunset after 2020 like
the increased limits.
Recovery Rebates for Individuals. All US residents with adjusted gross
income of up to certain limits are entitled to receive rebates under the
CARES Act. An additional rebate per qualifying child under the age of 17
also will be provided.
Communications with church members about
finances is important, especially during trying
times. Transparency is key, as difficult as it is
to communicate the cold, hard facts about your
church’s financial situation.
#2: Business and individual tax provisions
There are various business and individual tax provisions available
through the CARES ACT. First, the business tax provisions:
Payroll Taxes Delay. The CARES Act created a “payroll tax deferral
period” from March 27, 2020 through the end of 2020. Employers may
defer the deposit and payment of the “employer share” of the Social
Security tax that they would otherwise pay to the federal government
with respect to their employees. For religious organization employers,
this is usually limited to Social Security taxes on the wages of lay (nonclergy)
employees. The 2020 taxes deferred must be paid in the following
two years (12/31/2021 to pay at least 50% of what is due for 2020 and
until 12/31/ 2022 to pay the remaining amount). Employers that receive a
loan under PPP may not defer the deposit and payment of the employer’s
share of Social Security tax due after the employer receives a decision
from the lender that the PPP loan is forgiven under the CARES Act.
Employee Retention Credit for Employers Subject to Closure Due to
COVID-19. Employers can receive a refundable credit against
applicable employment taxes of up to $5,000 per employee in 2020.
This credit applies to wages paid after March 12, 2020 and before
January 1, 2021.
Pandemic Unemployment Assistance Program provides payment to
those not traditionally eligible for unemployment benefits and who are
unable to work as a direct result of COVID-19. It also provides enhanced
benefits for all workers eligible for unemployment and intends to cover
independent contractors. It extends coverage to workers who are selfemployed,
seeking part-time employment (if permitted under state law),
do not have sufficient work history, or otherwise would not qualify
for regular unemployment under state or federal law and become
unemployed or cannot find work due to COVID-19.
#3: Retirement-related provisions
Retirement-related provisions include Coronavirus Related
Distribution (CRD) and loan rule changes:
The CARES Act adds a new category of in-service distribution,
known as Coronavirus Related Distribution (CRD), available to qualified
individuals regardless of whether the distribution would otherwise be
allowed. In-service distributions are distributions while the retirement
plan participant is still employed. It also increases the loan limits for
any loan made from a 401(a), 403(b) or governmental 457(b) plan to a
qualified individual during the 180-day period beginning on March 27,
2020. Additionally, it increases the maximum loan amount to $100,000
and allows loans up to 100% of the present value of the retirement plan
participant’s account. These two provisions are not mandatory; plan
providers may offer at their discretion.
#4: Student loan provisions
Student loan provisions include expanding tax-free educational
assistance to include student loan payments from employers. An
employer may contribute up to $5,250 annually toward an employee’s
student loans, and such payment would exclude from the employee’s
income. This applies to any student loan payments made by an employer
to the employee or directly to the lender on behalf of an employee after
March 27, 2020 and before January 1, 2021. The provision also includes
temporary relief for student loan borrowers. Principal and interest
payments are deferred without penalty on federal student loans through
September 30, 2020.
To learn more about the CARES Act legislation, we urge you to visit
https://home.treasury.gov/policy-issues/cares.
“The information contained herein is for informational purposes only and does not constitute
any financial, investment, legal, or tax advice. While MMBB made every attempt to ensure that
the information is accurate, MMBB is not responsible for any errors or omissions or the results
obtained from the use of this information.”
Rev. Dr. Perry J. Hopper, MBA serves as the associate executive director
and director of denominational relations of MMBB [ www.mmbb.org ]. He joined
MMBB’s staff in 1987 and is responsible for coordinating special programs that
support MMBB’s mission. Perry works in various capacities to best serve existing
members, to reach prospective members, and to maintain solid relationships
between MMBB and its affiliates.
His education includes a B.A. in political science (with a minor in business
administration) from the University of Washington and an MBA from Penn
State University. Perry also holds a Master of Divinity degree from the Harvard
University Divinity School and a Doctor of Ministry degree as a Samuel DeWitt
Proctor Fellow at the United Theological Seminary of Dayton, Ohio.
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