Is Healthcare Sharing Tax Deductible?
If your church is experiencing some sticker shock with your 2021 health insurance increases, you’re not alone. Many people are searching for alternative healthcare solutions, including health reimbursement arrangements (HRAs) and healthcare sharing ministries. Healthcare sharing ministries are cost-sharing programs or private healthcare systems (PHCS) that are set up as a faith-based 501(c)3 not-for-profit organization. Members share religious…
The Parsonage Allowance
IRC § 107 provides an exclusion from gross income for a “parsonage allowance,” housing specifically provided as part of the compensation for the services performed as a minister of the gospel. This includes the rental value of a home furnished to him or her as part of compensation or a housing allowance, to the extent…
What is the housing allowance?
A licensed, commissioned, or ordained minister who performs ministerial services as an employee may be able to exclude from gross income the fair rental value of a home provided as part of compensation (a parsonage) or a housing allowance provided as compensation if it is used to rent or otherwise provide a home. A minister…
Non-taxable benefits for ministers
Disability Insurance – The church can reimburse its pastor for this premium or pay it directly. Health Insurance – Group health insurance plans are a qualified fringe benefit. If the church does not qualify for a group plan because there is only one employee, you will need to establish either a One Person Health Reimbursement…
Penalty abatement from the IRS?
Due to COVID-19, the due date for filing your 2019 tax return was postponed to July 15, 2020. If you didn’t request an extension of time to file or send in your tax return by July 15, the IRS may charge a failure to file penalty. If you didn’t pay your taxes by July 15, the IRS…
Clergy Moving Expenses Q&A
This Q&A has been developed to provide general information for churches and clergy who may have questions about the change in federal tax law concerning moving expense payments. Q: How does the new law change moving expense payments? A: The moving expense exclusion and the individual deduction were both eliminated for tax years 2018 through…
Basic steps to start a new business
Understanding the tax responsibilities that come with starting a business venture can save you money and help with success. Choose a business structure The form of business determines which income tax return a business taxpayer needs to file. The most common business structures are: Sole proprietorship: An unincorporated business owned by an individual. There’s no distinction between…
The separation of accounting duties
There are three functions of the accounting process that should be performed by different individuals: the recording of transactions, the authorization of transactions, and the custody of assets. As an example, when writing a ministry check, the functions of printing the check (recording), signing the check (authorization), and reconciling the bank statement (custody) should be…
Guide to Clergy Compensation
Clergy Status is a person who has been granted ecclesiastical authority by an association, denomination, or state through the rite of ordination, commissioning, or licensing. 1. Generally, an ordained minister has a Master of Divinity from an accredited theological school and is recognized through the rite of ordination to preach and teach the gospel, to…
Should my church outsource our bookkeeping?
Church bookkeepers have for a long time been confused with accountants. They, however, carry very different responsibilities. Bookkeepers maintain the financial records of the church that includes income and expense records. They are supposed to keep records of the dates and amount of every transaction of the church. It is also their task to keep…
