Health Insurance Payroll Deduction…Taxable or Not?
In order for the payroll reductions for health insurance to be tax-free for employees, the church has to establish a POP (premium only plan) or FSA (flexible spending account) or a cafeteria plan. These benefit plans offer the employee the option to forgo part of his or her compensation on a tax-free basis in order…
MN Department of Revenue Issues TurboTax Warning
On Friday, March 8, 2013, the Minnesota Department issued the following warning regarding Intuit products used for income tax preparation (TurboTax, Lacerte, Intuit online, ProSeries). “The Minnesota Department of Revenue advises you not to use Intuit (TurboTax, Lacerte, Intuit online, ProSeries) to file your Minnesota taxes electronically or on paper. Intuit has discovered multiple issues…
Housing Provided for Student Clergy – Taxable or Not?
Like other fringe benefits, free or discounted church-provided lodging is usually subject to income and other taxes. To determine the fair market value of the housing provided to an intern, the church may check local newspaper listings for comparable rental properties or ask a local realtor for an estimate of the property’s rental value. The…
Online Tax Software and Your Clergy Tax Return
Online tax software are great programs for basic secular returns but is often times challenged by the complexity of a clergy return. These software packages do not address some of the tax rules unique to ministers which will greatly affect the accuracy of your return. Therefore, clergy using an online tax software package will require…
FAFSA and the IRS
Every year, students across America who hope to receive federal financial aid for college must apply for it by filling out a FAFSA, the Free Application for Federal Student Aid. This year, the timing is a little more difficult than usual. Because the IRS had to delay processing of individual returns this year due to…
Secular and Clergy Employment Status…What’s the difference?
Churches are required to classify each person that is hired as either a secular or clergy employee. This is a very crucial step in the hiring process. Clergy are taxed differently than secular employees and this treatment is mandated by law. It isn’t optional, so it is important to know who qualifies as secular or…
Top 12 Tax Return Preparation Errors
1. Number transposition and spelling errors. This includes income and deduction amounts and client Social Security numbers, addresses and zip codes. Spelling errors should also be avoided – they indicate a lack of attention to what you are doing. 2. Unreported 1099 income. Clients frequently leave out 1099s, but the preparer should make sure all…
IRS Updates Mileage Rates for 2013
The Internal Revenue Service has issued the 2013 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes. Beginning on Jan. 1, 2013, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be: 56.5 cents per…
IRS Audits on Churches Temporarily Halted
In a previous article “Clarifying the IRS Rules About Endorsing Candidates From The Pulpit,” we wrote about the IRS rules and regulations concerning churches/clergy officially endorsing political candidates. Throughout the election season, the IRS was inundated with complaints regarding the churches officially endorsing candidates. Recently, Bloomberg BNA talked with Russell Renwicks of the IRS Tax-Exempt and…
Social Security Tax Increase Starting January 1, 2013
Over the past two years, there has been a “payroll tax holiday” in effect. This reduced the employee’s share of Social Security from 6.2% to 4.2%. This “payroll tax holiday” is scheduled to expire on December 31, 2012. Non-clergy employees will have an additional 2% of Social Security tax withheld from their paychecks starting on…
