Q: What are the potential tax ramifications for leasing ministry parking lots to outside entities?
Ministries should carefully consider the potential tax issues created by leasing ministry parking lots.
There are few organizational matters more important to a ministry than protecting its finances. Tax laws often change, and ministry leaders should be aware of situations that could jeopardize their 501c (3) status.
Ministries should carefully consider the potential tax issues created by leasing ministry parking lots.
The "parking lot tax" within the Tax Cuts and Jobs Act of 2017 has been repealed.
To balance donors' wishes with ministry priorities, it's a good idea to create a policy stating what types of donations the ministry will accept.
Your ministry may be tax exempt, and should be aware of certain political activities associated with tax status, as well as religious organization tax restrictions.
Be aware of the test created by the IRS to determine the Unrelated Business Income Tax (UBIT) which is an income of a tax-exempt organization, to see what taxes your ministry may owe.
Legal questions concerning tax exemptions relating to churches and non-for-profit organizations, as well as information regarding 501 (c)(3) status and Form 1023 may be found here.
Churches and other ministries must use caution when becoming involved with political activity to avoid losing their 501(c)(3) tax-exempt status.
Guard against embezzlement of church funds and crime by developing a comprehensive written policy governing ministry finances.
Your ministry may need and Employer Identification Number (EIN) which is basically a federal identification number, for essential purposes such as opening a bank account.
Depending on the collection and distribution process, the cash, gift cards, or presents may need to be reported to the IRS as taxable income.
Sadly, financial crimes against ministries are common. Strengthen accountability within your ministry with an annual review.
Thank you for your interest in Brotherhood Mutual. We appreciate the opportunity to provide your church or other ministry with an insurance quote and will reply to your request as soon as possible.
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