The New Tax Law and Church Budgets

The New Tax Law and Church Budgets

January 23, 2018

How will the new tax law (TCJA – Tax Cuts and Jobs Act) affect church budgets?

First, what probably WON’T change.  

Gifts to the church from people’s wills and estates probably won’t change. 

Most people include a gift to the church in their will because they love the mission and ministry that is happening, and they want to leave a legacy that will survive their time on earth.

Now is a great time to start or rejuvenate your church’s Endowment, and be able to receive bequests.

Second, what probably WILL change.

What could affect the budget, is the increase in the standard deduction. This is intended to allow nine out of ten taxpayers to use the shortened return form. Reducing the number of people who itemize their reduction from the current 45 million in 2017, to an estimated 18 million people in 2018, would “damage charitable giving by $13 billion or so annually,” says Tim Delaney, President of the National Council of Nonprofits. This is an expected 3% percent drop ( 
3 Things to do
  1. Remind people of the joy of partnering financially with God mission and ministry in the world: the good feelings one has when disciples are made and lives are transformed. Many people do not itemize their charitable gifts because they love to make a positive difference in the world. 
  2. With the stock market continuing at record high levels, gifts of stocks that have increased in value, help the donor in two ways—first, they do not need to pay capital gains tax on the increased value—and second, they could receive a charitable deduction for the sale price of the stock. Note that the stocks must be transferred and NOT SOLD FIRST.   Please note that we encourage you to consult with a professional advisor prior to claiming any tax benefits that might result from a gift.
  3. If you are over age 70½, and have a pension, the mandatory standard distribution can be DIRECTLY donated to a charity, and is NOT counted as income (up to $100,000). This is called the Charitable IRA Rollover.
 The Iowa United Methodist Foundation can help with wills and estate seminars, starting and rejuvenating endowments, stock gifts and charitable IRA rollovers, and charitable gift annuities.

Please call 515-974-8927 or [email protected] for more information.