Tax Tips for Higher Education

ISSUE
Has your institution considered Revenue Enhancement Opportunities – such as “Sustainable Missionary Farming?”

SITUATION
Troas Bible College (TBC) is a private college exempt under Internal Revenue Code section 501(c)(3) and as a “school” under section 170(b)(1)(A)(ii).  They are required to file Form 990 annually.

We did an R.E.O. (Revenue Enhancement Opportunities) project with TBC in 2017 and they are embarking on a comprehensive program of “Sustainable Missionary Farming.”  As part of this R.E.O. project (Phase II) this program, TBS has:

ISSUE:
The “Tax Reform and Jobs Act” is more notable for what it left out with respect to colleges, seminaries, and universities.  However, there are things you should be aware of.

SITUATION:
Denali Christian College (DCS) is a private college exempt under Internal Revenue Code section 501(c)(3) and as a “school” under section 170(b)(1)(A)(ii).  They are required to file Form 990 annually.

ISSUE:

Donors generally can deduct their contributions only in the year they actually make them in cash or other property

SITUATION:

Idaho Bible College & Seminary (IBCS) is a private college exempt under Internal Revenue Code section 501(c)(3) and section 170(b)(1)(A)(i).  They are not required to file Form 990 annually.

IBCS’s Controller called us to pass along a question they received from one of their donors.  For 2017, December 31 is on a Sunday.  New Year’s Day (January 1) is a banking holiday.  The donor was concerned about whether a contribution they made to IBCS – via credit card – would be considered a charitable deduction in 2017 or 2018.

We tell them that we get a lot of these types of questions – especially in December.  Credit card contributions are deductible in the year (on the date) the donor makes the charge to their credit card.

ISSUE:

Services in the employ of certain higher education institutions, performed by a student, qualify for the exception from FICA tax.

SITUATION:

Marathon Bible College (MBC) is a private college exempt under Internal Revenue Code section 501(c)(3) and section 170(b)(1)(A)(ii).  MBC files Form 990 and Form 990-T annually.

The Accounting team at MBC emailed us to ask about the “Student FICA Exception.”  We tell them that services performed for MBC by “students” (one who is a half-time undergrad or graduate student) will generally not be subject to FICA tax.  And, there is a recent IRS “issue snapshot” that covers this issue.

We also told them that, if the IRS audits their records in this area, they would review your documentation that shows the students qualify for the FICA exception. The IRS would check to see that this information is sufficient to show that the student employee had the status of a student and the portion of the year that this status was held. In addition, they would need to know when the student worked during the year.

ISSUE: H.R. 1 – the House’s version of tax reform - has some negative issues for higher education.  One of these is a limitation on “employer-provided housing.”     SITUATION: Saltwater Christian College (SCC) is a private college exempt under Internal...