IRS updates mileage rates for 2020

The Internal Revenue Service issued the 2020 standard mileage rates that ministers can use to calculate the deductible costs of operating their automobile for ministry or business. This rate can also be used by churches to reimburse mileage. Starting on Jan. 1, 2020, the standard mileage rates for the use of a car (along with…

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“Can our Church give benevolence gifts to the Pastor/employee of the Church?”

This is an area where Clergy Financial Resources would advise caution. In order to maintain their tax exempt status, Churches have to use their resources to pursue charitable goals. The Internal Revenue Code strictly forbids the use of Church assets or income to benefit individuals who have a close relationship with the Church. This is…

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Common Payroll Errors to Avoid

Let’s face it. Managing church payroll – and the avalanche of payroll regulations – means you’re under a lot of scrutiny, and you have to get it right. Each year sixty percent of the church W-2 forms are reported with errors. This is created by the lack of understanding of the reporting requirements of taxable…

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How do I report income that straddles two years?

With the end of 2019 approaching, we frequently receive questions about income split between different years. “My church is paying for my moving expenses. They gave me a two checks for $1,000. Can I wait to cash one or both until January 1st so the payments go on next year’s tax return?” “My Church was…

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FAQs on the 2020 Form W-4

1. Why redesign Form W-4? The new design reduces the form’s complexity and increases the transparency and accuracy of the withholding system. While it uses the same underlying information as the old design, it replaces complicated worksheets with more straightforward questions that make accurate withholding easier for employees. 2. What happened to withholding allowances? Allowances are no…

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2020 Housing Allowance Designation

2020 is almost here! December is a great time of year to update your housing allowance for the following year. Here are five quick facts about designating a housing allowance: The housing allowance designation can only be made for the future, not retroactively. This is why allowances are frequently updated in December or January for…

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Can I deduct the cost of clothing?

IRS allows clergy to deduct the cost of clothing on their Schedule SE, but there is a catch. The clothing has to be work-specific and not appropriate for use outside of work. For example, a nice three piece suit or a dress shirt cannot be deducted because these could easily be worn outside of work,…

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It’s here! IRS rolls out final Form W-4 for 2020

The IRS has released the final 2020 version of Form W-4, Employee’s Withholding Certificate. The IRS stood its ground and dropped the word “Allowance” from the title of the form, as well as dropping withholding allowances from the body of the form.  Filling out and submitting a Form W-4, Employee’s Withholding Allowance Certificate, the Employee’s…

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Is a holiday gift to a Minister taxable?

There is a lot of misinformation about what should and should not be considered taxable income when it comes to holiday gifts. As with many other tax situations, the correct answer relies heavily on the details of the situation. This article will describe some general information, but you should consult your tax professional before making…

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Holiday Gifts to Employees can be taxable

Churches want to acknowledge the hard work of their employees and volunteers, so they frequently give gifts around the Holidays. Many of these holiday gifts fall into the category of “De Minimis Fringe Benefits”. In IRS terms, a “De Minimis Fringe Benefit” is a benefit with a value too small or too difficult to value….

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