Professional Dues vs Contributions

Ministers often pay a small annual renewal fee to maintain their credentials–this is a deductible ministry expense. However, ministers’ contributions to the church are not deductible as ministry expenses. These are deductible only as charitable contributions. The difference is that charitable contributions are a personal itemized deduction on Schedule A, while ministry deductions are directly…

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What should I know about Ministry Expenses

If you paid for ministry-related expenses out of your own pocket, you may be able to deduct those costs. You can only deduct unreimbursed ministry expenses that are ordinary and necessary to your ministry as an clergy employee. An ordinary expense is one that is common and accepted in your industry. A necessary expense is…

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Don’t Rush to File Your Return!

Instead of rushing to April 15 to file your taxes, you can file an extension. There’s no shame in an extension, and millions are processed every year. Everyone with an April 15 deadline can get six extra months by filing an extension form. You need to pay what you owe–the extension is to file your return…

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Down Payment Qualify for Housing Allowance?

A down payment on a home may be excluded from income as a housing allowance, assuming it does not exceed housing limitation. You can exclude the lowest of the following three amounts from income for federal income tax purposes when the church or pension properly designates a housing allowance: The housing allowance designated by the…

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Is Clergy Auto Allowance taxable?

An auto or gas allowance is a cash payment given to you each pay period by the church for the purpose of covering your automobile ministry expenses. When you receive an auto allowance, it is considered taxable “compensation” and included with your wages reported in Box 1 on Form W-2. Federal tax law allows you…

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Benevolence Funds

Benevolence gifts are given to needy individuals or families. Benevolence gifts made directly by a donor to needy individuals are not deductible. To qualify for a charitable deduction, contributions must be made to a qualified organization.

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Can I amend my housing allowance?

The housing allowance resolution can be amended at any time. However, it can only be applied prospectively. A pastor’s amended housing allowance must be established or designated by the church. The preferred way to do this is for the church council/board to adopt the housing amendment resolution in the minutes of the meeting.

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Are you an Employee or Contractor?

Generally, an employee has an ongoing relationship with the employer which includes a job description and compensation paid by the hour or salary. A contractor would have an irregular relationship, no job description and paid by contract only. This information is important when structuring an employee vs contractor. Employee misclassification often can trigger IRS attention

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Which organizations can receive deductible charitable contributions.

You can ask any organization whether it is a qualified organization, and most will be able to tell you. Or go to IRS.gov. Click on “Tools” and then on “Exempt Organizations Select Check” (www.irs.gov/Charities-&-Non-Profits/Exempt-Organizations-Select-Check). This online tool will enable you to search for qualified organizations.

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Keeping Employee Files

In order to comply with regulations and be able to find information quickly when necessary, churches should actually keep several different files for all their employee records. Typically, those files should be: The Personnel File This file should only contain information that relates to an employee’s job and job-related decisions, such as applications, performance reviews,…

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