Generosity at Year’s End

The end of the calendar year is a time when donors often give generously to churches and other charities. Now is the time for churches to think about how this time of year can help with revenue.

Many churches and other religious charities have joined in the global generosity movement known as “Giving Tuesday.” In 2021, Tuesday, November 30 has been designated as Giving Tuesday.  Churches and other charities may want to remind their donors that they are a viable, tax-exempt option, and encourage donors to consider a gift to them on or around Giving Tuesday.

More generally, taxpayers are inclined to make donations during the final weeks of the calendar year in order to realize any tax benefits in the current tax year.

However, it is important to keep in mind that some federal tax laws regarding charitable giving have changed recently. The impact on churches and other charities cuts both ways.

On the one hand, donors may be less likely to give for tax benefits than in past years. Changes in the federal tax code have raised the amount of the federal standard deduction to $12,400 per year for single taxpayers, and $24,800 per year for married couples. The upshot is that more taxpayers are claiming this standard deduction and fewer are able to itemize deductions for charitable giving.  As discussed in a previous blog article, some donors may be able to “bundle” their charitable giving such that a larger amount occurs in one particular tax year, and a lesser amount is given in an adjoining tax year, in order to continue taking advantage of the itemized deduction for charitable giving. But for those who do not plan this way, the current law may have a chilling effect on charitable giving.

On the other hand, there is a special tax incentive this year to encourage charitable giving. According to the IRS website:

The law now permits taxpayers to claim a limited deduction on their 2021 federal income tax returns for cash contributions they made to certain qualifying charitable organizations.

These taxpayers, including married individuals filing separate returns, can claim a deduction of up to $300 for cash contributions to qualifying charities during 2021. The maximum deduction is $600 for married individuals filing joint returns.

So, while many donors may not be able to claim their full charitable giving as an itemized deduction in for 2021, all donors can claim this deduction for their first $300 for an individual, or $600 for a couple. Churches may want to remind their donors of this tax incentive for giving between now and the end of 2021. Though the amount of the deduction is small, it may encourage those who have not given at all in 2021 to make a year-end contribution to the church.

These final weeks of the year are also a good time for churches to make plans for issuing year-end charitable donation receipts before the conclusion of January 2022.

Contact Clergy Financial Resources to help you with the next steps.

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Clergy Financial Resources serves as a resource for clients to help analyze the complexity of clergy tax law, church payroll & HR issues. Our professionals are committed to helping clients stay informed about tax news, developments and trends in various specialty areas.

This article is intended to provide readers with guidance in tax matters. The article does not constitute, and should not be treated as professional advice regarding the use of any particular tax technique. Every effort has been made to assure the accuracy of the information. Clergy Financial Resources and the author do not assume responsibility for any individual’s reliance upon the information provided in the article. Readers should independently verify all information before applying it to a particular fact situation, and should independently determine the impact of any particular tax planning technique. If you are seeking legal advice, you are encouraged to consult an attorney.

For more information or if you need additional assistance, please use the contact information below.

Clergy Financial Resources
11214 86th Avenue N.
Maple Grove, MN 55369

Tel: (888) 421-0101 
Fax: (888) 876-5101
Email: clientservices@clergyfinancial.com