There is a new tax credit for 2020 and 2021 income tax returns that you should know about as it may affect how many of your donors need contribution statements this year.
The Coronavirus Aid, Relief and Economic Security (CARES) Act passed last year in response to the pandemic ... contained a tax credit that allows taxpayers who take the standard deduction ... to deduct up to $300 in donations to qualifying charities.
In 2021, the deduction rises to $300per person rather than per tax return as it is for the 2020 tax return. In plain English that means a married couple filing jointly in 2021 could deduct up to $600 of donations without having to itemize.
For both years, this is a "above the line" tax deduction which means taxpayers will be able to claim the tax deduction to lower their AGI (adjusted gross income). On the 2020 Form 1040 DRAFT it is on line 10b...but that could change before the IRS allows taxpayers to file this Friday.
Consequently, you may want to let your donors know that they will need a donation receipt or annual giving statement from your church or nonprofit in order to claim the tax credit...in regards to their donations to your organization.
Since you are going to have a lot more donors requiring donation receipts, make sure those receipts and annual contribution statements are correct. See what every receipt and statement MUST include; what donations you can give a receipt for; and much more ...
When it comes to a housing allowance, many payroll providers report the payments incorrectly.
it is our job as Church Administrators to make sure they are doing it correctly and if they don't...make them correct it!
The error I see most often when onboarding new payroll clients ... is the incorrect reporting of housing allowance payments in Box 1 of the minister's W-2.
This will cause your minister to pay additional income taxes incorrectly. So ...IF you pay housing allowance payments THRU a payroll provider and there is NOTHING in Box 14 of their W-2, you need to inform them. See this post about that incorrect reporting...