New Changes to the Employee Business Expense Deduction

Prior to the Tax Cuts and Jobs Act, which went into effect, January 1, 2018, unreimbursed ministry-related expenses were generally deductible on the minister’s individual tax return as a miscellaneous itemized deduction (Schedule A) if they exceeded 2% of an individual’s AGI. Starting in 2018, these deductions will be eliminated for tax years through 2025. This includes unreimbursed…

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How Does the IRS Contacts Taxpayers

Everyone should know how the IRS contacts taxpayers. This will help people avoid becoming a victim of scammers who pretend to be from the IRS with a goal of stealing personal information. Here are some facts about how the IRS communicates with taxpayers: The IRS doesn’t normally initiate contact with taxpayers by email. The agency…

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Ministers Defined by the IRS

When a church hires an employee, one of the initial decisions that must be made is whether to treat the worker as clergy, non-clergy employee or contractor. This decision may seem insignificant, but it has huge implications when it comes to payroll. Ministers have what is commonly referred to as “dual tax status.” For federal…

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Is a Pastor’s Retirement Gift Taxable?

Federal tax law requires all forms of compensation to be reported as taxable income unless specifically excluded by law. Gifts are one such exclusion. The question, then, is whether retirement gifts are taxable compensation for services rendered or tax-free gifts. This an­swer is not always clear. In a series of cases in the early 1950s,…

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Love Offerings: Taxable or Not?

Churches sometimes collect “love offerings” from the congregation for a pastor, visiting minister, volunteer, or staff member in recognition of services rendered. So, if a church takes up a love offering for one of its service providers, is it reportable as income on Form W-2. If the recipient is not a church employee, the income should…

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IRS Increases Annual Gifts Tax Exclusion

For starters, you can give gifts valued up to the annual gift tax exclusion amount each year without ever touching the lifetime exemption. For 2017, the exclusion was $14,000 per recipient. In 2018, it increased to $15,000 per recipient. The federal gift tax applies to the giver of a gift, not the recipient, for amounts…

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