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.
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Finance and Tax
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.
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Q: Should my ministry be concerned about the parking lot tax?
The "parking lot tax" within the Tax Cuts and Jobs Act of 2017 has been repealed.
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Q: What should ministry leaders know about donations that are directed by the donor to go to a specific individual or program?
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.
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Q: What political activity is prohibited by tax-exempt status?
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.
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Q: What is the Unrelated Business Income Tax (UBIT)?
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.
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Q: Is our ministry automatically tax-exempt?
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.
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Q: How should a church or ministry respond to requests for support from political groups and candidates?
Churches and other ministries must use caution when becoming involved with political activity to avoid losing their 501(c)(3) tax-exempt status.
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Q: How do we protect ministry finances against theft?
Guard against embezzlement of church funds and crime by developing a comprehensive written policy governing ministry finances.
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Q: Does our ministry need an Employer Identification Number (EIN)?
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.
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Q. Are gifts to ministry workers taxed?
Depending on the collection and distribution process, the cash, gift cards, or presents may need to be reported to the IRS as taxable income.
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Ministry Finances Checklist
Sadly, financial crimes against ministries are common. Strengthen accountability within your ministry with an annual review.
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