By Deborah Bailey, Special to the AFRO
September 19, Rep. Elijah Cummings (D-7th) partnered with Walter Scott Thomas, Bishop of New Psalmist Baptist Church to connect with clergy across the city for a lesson in the Tax Cuts and Jobs Act of 2017, the Trump tax plan that will change how federal taxes are filed on 2018 income.
“This information is going to hit your parishioners like a ton of bricks,” Cummings said to more than 50 pastors and church leaders gathered at New Psalmist Baptist Church to gain a better understanding of the new tax law, which will take effect Jan. 2019.
Eric Hall, chief congressional liaison of the IRS, said the biggest issue most church members need to be aware of is the change in the standard deduction. Starting in 2019, the standard deduction for federal income taxes will increase. The single standard deduction will be $12,000, married joint filers or qualifying widowers can deduct $24,000 and those filing as head of household can deduct $18,000.
“Individual tax payers can either take a standard deduction or do an itemized deduction,” Hall said.
“These changes are already affecting people’s tax liability and many don’t know it yet,” he added.
Thomas expressed concern that tax preparers will dissuade people from giving because it may no longer help decrease their tax burden.
“Tax preparers will say, you do not get a benefit for giving to the church,” Thomas said.
“This is our problem and we have to start changing the language we use with our parishioners now. We have to start teaching people to give because this is what God asks,” added Thomas, warning clergy not to depend on “big givers” who may be motivated primarily by a sizeable tax deduction.
Gerald Adams, CPA and founding director of Abrams, Nole & Williams, P.A., joined Hall to answer complex questions about how the new tax law may require some churches to start paying income taxes on auxiliary amenities. Rental of church facilities and in some cases services such as parking and catering could be considered as taxable depending on several factors churches have not had to contend with in the past.
“Up until now, churches have been able to compile all of their income streams and all were tax exempt,” said Adams.
“If you are going to give a 1.5 trillion dollar tax cut to the rich, you’ve got to take it from somewhere,” said Cummings.
“So you take it from the middle class. You take it from their tithes and offerings as well as those people of faith trying to get to the middle class.”