Three key areas to get it right

Whether it’s TurboTax, TaxAct, or H&R Block, tax preparation software is generally affordable when compared to hiring a qualified tax professional. These programs are also designed to be efficient, often allowing users to complete and file a return in just a few hours.

However, ministers should be aware of several important cautions before relying on tax software alone. Clergy are subject to unique tax rules and benefits that make their tax situation more complex than that of most taxpayers. Unfortunately, many of these complexities are not handled well by standard tax preparation programs.

In particular, three key areas often require extra attention:

Dual tax status
Ministers have a unique “dual tax status.” They are treated as employees for federal income tax purposes, but as self‑employed for Social Security and Medicare taxes. Many tax software programs struggle to apply this distinction correctly without manual intervention.

Housing and parsonage allowances
Qualified ministers may have a portion of their compensation designated as a tax‑free housing or parsonage allowance, which can be a significant tax benefit. Most tax preparation software is not specifically designed for clergy and may not accurately account for these allowances without specialized adjustments.

Business expenses
Ministers often incur work‑related expenses that must be allocated between taxable income and the tax‑free housing allowance. Many tax software programs do not automatically calculate the nondeductible portion of business expenses attributable to tax‑free income, requiring manual calculations to ensure compliance.

Because of these issues, ministers who use tax software should proceed carefully and be prepared to make manual adjustments—or consider working with a tax professional who is experienced in clergy tax matters.

If you need guidance that is tailored specifically to your unique situation, we encourage you to connect directly with Pro Advisor Support. Their experienced team specializes in assisting clergy and church organizations with complex tax, payroll, bookkeeping, and HR matters. Whether you have detailed questions about compliance, deductions, or planning strategies, they can provide expert advice and walk you through the next steps with clarity and confidence.

Clergy Financial Resources
Tax I Payroll I Bookkeeping I HR | Consulting
11214 86th Avenue N.
Maple Grove, MN 55369

Tel: (888) 421.0101

Clergy Financial Resources serves as a resource for clients to help analyze the complexity of clergy tax law, church payroll & HR issues. Our professionals are committed to helping clients stay informed about tax news, developments and trends in various specialty areas.

This article is intended to provide readers with guidance in tax matters. The article does not constitute, and should not be treated as professional advice regarding the use of any particular tax technique. Every effort has been made to assure the accuracy of the information. Clergy Financial Resources and the author do not assume responsibility for any individual’s reliance upon the information provided in the article. Readers should independently verify all information before applying it to a particular fact situation, and should independently determine the impact of any particular tax planning technique. If you are seeking legal advice, you are encouraged to consult an attorney.

For more information or if you need additional assistance, please use the contact information below.

Clergy Financial Resources
11214 86th Avenue N.
Maple Grove, MN 55369

Tel: (888) 421-0101
Fax: (888) 876-5101
Email: clientservices@clergyfinancial.com