Sabbaticals and Compensation

Sabbaticals and Compensation Clergy members are among the professionals who are commonly given an opportunity to take a periodic break labelled as a “Sabbatical” after a a number of years of ministry service to their church. With the spiritual and emotional demands that often come with pastoring a church, it is indeed a good practice…

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Church Liability and Insurance

My father was a small business owner when I was a child. I remember vividly one very bad day for his business. In the course of normal operations that day, the business received a summons indicating it had been sued by one of its customers. For a small business, this was disruptive news. Did the…

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IRS to Delay 2021 Income Tax Filing Deadline to May 17

The IRS in January pushed back the start of tax season to Feb. 12. This gave the agency more time to prepare after December’s Covid relief bill, which included a second round of stimulus checks to Americans, that the agency was charged with delivering. The Internal Revenue Service announced today that the federal income tax…

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Your Church’s Tax-Exempt Status

The details surrounding a church’s federal tax-exempt status can be confusing, especially when a specific question arises. The issue of tax-exempt status is important for two reasons. First, exempt status allows a church to avoid paying corporate taxes. Second, exempt status allows those who donate to the church to claim a tax deduction in certain…

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Guidance for American Rescue Plan

The IRS is reviewing implementation plans for the newly enacted American Rescue Plan Act of 2021. Additional information about a new round of economic impact payments, the expanded child tax credit, including advance payments, and other tax provisions will be made available as soon as possible. The IRS strongly urges taxpayers not to file amended…

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President to sign American Rescue Plan Act of 2021

The House and Senate have just passed the American Rescue Plan Act (ARP) and shortly the president is expected to sign it into law. This bill includes many provisions that have major tax impacts for 2020 and 2021 tax returns. 2020 tax-free unemployment benefits Initially, the bill didn’t include retroactive tax provisions, but during the…

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Understanding Your Pay

Church workers, like employees of any organization, usually receive a “pay stub” each time they are compensated. The pay stub may be a physical attachment to a paper paycheck, or it may be an electronic form if payment is made by direct deposit. This document may seem similar to a piece of junk mail after…

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Can employees claim “exempt” on W-4?

You use a Form W-4 to determine how much federal tax withholding you need from your paycheck. Form W-4 tells an employer the amount to withhold from an employee’s paycheck for federal tax purposes. When you file as exempt from withholding with your employer for federal tax withholding, you don’t make any federal income tax payments during the year. (A taxpayer is still…

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Ministry Expense Reimbursements

Church employees may incur a number of legitimate business expenses in the completion of their duties.  These expenses may include travel costs, mileage driven, business meals, subscriptions to ministry periodicals, home office equipment, education related to business, mobile phone charges, and entertainment costs. While the precise details of what does and does not qualify as…

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