Do I have to report income that is less than $600?
Yes. A common misconception or myth is that if you are paid less than $600 in a year, then you don’t have to report this income on your tax return. The truth is that $600 is just the threshold for the employer providing a formal 1099-MISC form to you and to the IRS. Even if…
How do tax brackets work?
“You don’t want to earn too much- that’ll put you in a higher tax bracket.” You may have heard this particular piece of tax advice before. While earning more money can technically put you into a higher tax bracket, that isn’t as bad as it sounds. The United States has a progressive tax system, where…
“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…
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…
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…
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….
Is my Social Security Allowance taxable?
The short answer to this question is yes. Unlike non-clergy employees, clergy do not have Social Security or Medicare taxes taken out of their paycheck. The Church also does not pay any matching portion to IRS, so the Minister has to pay both halves, the employee and employer portions. These are usually paid in quarterly…
I received a Lilly Grant, is it taxable?
The Lilly Endowment Clergy Renewal Program provides an opportunities for pastors to step away briefly from the persistent obligations of daily parish life and to engage in a period of renewal and reflection. This grant is up to $50,000, and all or part of the amount received may be tax-free based on the allocation of these funds: Pulpit Supply – Maximum…
I missed the 1040 extension deadline, now what?
If you extended your 1040 tax return to October 15th and then missed the extension deadline, you may be concerned about what happens to you. If you are due a refund on the return, there is no penalty for missing the deadline. IRS penalties for late filing and late payment do not apply if you…
Can a Minister deduct home office expenses and receive a housing allowance?
The answer to this question is no. A 1964 Tax Case (Deason v. Commissioner) stated that any deduction related to tax-exempt income cannot be claimed. Deducting income for clergy housing and then deducting again for a home office at that same location would amount to taking a double deduction, which is not allowed. In general,…
