By Aaron Earls
Millions of Americans will soon receive direct checks from the U.S. government as part of the COVID-19 Pandemic Phase III Stimulus Package; that includes pastors.
In addition to the money sent to individuals, the $2 trillion economic relief plan has provisions that may benefit churches and other nonprofits.
Individual benefits
Pastors and other employees of ministries or nonprofit organizations are eligible for the cash payments.
U.S residents who are not the dependent of another taxpayer, have a work eligible Social Security number, and have adjusted gross income under $75,000 for an individual, $112,500 for heads of households, or $150,000 for married couples will receive the full amount.
Individuals should receive $1,200, while married couples get $2,400. Those with children are eligible for an additional $500 per child.
As an example, a married couple with two kids making less than $150,000 should receive a one-time payment of $3,400.
Those who earned more than the limits may also receive payments, but they are reduced by $5 for each $100 the income exceeds the threshold.
The amount is completely phased out if an individual’s income exceeds $99,000, $146,500 for heads of households with one child, $198,000 for a married couple with no children, and $218,000 for a family of four.
For pastors or ministry staff who lost their job or saw their hours reduced, the relief package also provides assistance.
Charitable deductions
The relief plan creates a new tax deduction for charitable donations up to $300 annually for those who do not itemize their taxes.
For those who do itemize, the bill also temporarily suspends limits for tax deductions for individuals.
For 2020 tax purposes, an individual can deduct 100% of a charitable cash gift against their adjusted gross income.
If someone has $100,000 of income, they can give $100,000 and deduct the full amount. Previously, it was up to 60%.
For corporations, the charitable contributions limits on taxable income have been expanded from 10% to 25%.
Government loans and tax credits
Nonprofit organizations, including churches, can receive a payroll tax credit for 50% of wages paid to employees if their operations were fully or partially suspended due to a COVID-19 related shutdown or have lost 50% or more of gross receipts compared with last year.
Nonprofit organizations, including churches, with less than 500 employees are able to access $350 billion in loans from the Small Business Administration.
In addition, those loans can be forgiven if the money is used for:
- Payroll
- Mortgage or rent
- Utilities
- Healthcare
For the full amount to be forgiven, the organization must maintain the same number of employees for the first eight-week period of the loan.
Employers cannot take both the tax credit and the small business loans.
Employers and self-employed individuals, including pastors, can defer payment of the employer share of the Social Security tax over the following two years.
UPDATE: The Small Business Administration has released an FAQ regarding faith-based organizations participation in Paycheck Protection Program and the Economic Injury Disaster Loan Program.
AARON EARLS (@WardrobeDoor) is online editor for Facts & Trends.
