Don’t Miss the Oct. 15 Tax Extension Deadline

Don’t miss the Oct. 15 Tax Extension Deadline Did you file an extension for your 2020 federal income tax return? If so, you have about 2-weeks remaining to file your individual return, as it is due on or before October 15, 2020. A tax extension gives you additional time to file but does is not…

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Safeguarding Form 4361 – Opting out of Social Security

Safeguarding Form 4361 – Opting out of Social Security  A minister who wishes to be exempt from social security/Medicare tax must file a Form 4361 with the IRS for approval. Before your application can be approved, the IRS must verify that you are aware of the grounds for exemption and that you want the exemption…

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New Educators Guidelines – COVID-19 protective items

Educators can now deduct out-of-pocket expenses for COVID-19 protective items Eligible educators can deduct unreimbursed expenses for COVID-19 protective items to stop the spread of COVID-19 in the classroom. COVID-19 protective items include, but are not limited to: face masks; disinfectant for use against COVID-19; hand soap; hand sanitizer; disposable gloves; tape, paint, or chalk…

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Reminder – Estimated payment Due on April 15th

Notice 2021-21, issued on March 29, 2021, does not alter April 15, 2021, deadline for estimated tax payments; these payments are still due on April 15. Taxes must be paid as taxpayers earn or receive income during the year, either through withholding or estimated tax payments. In general, estimated tax payments are made quarterly to…

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Charitable Contribution Bundling

Charitable Contribution Bundling  Recent changes in the federal tax code have raised the amount of the standard deduction compared to past years. At the time of this writing, the federal standard deduction is $12,400 per year for single taxpayers, and $24,800 per year for married couples. One of the implications of claiming the standard deduction…

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Ministers Versus Non-Ministry Employees

Ministers Versus Non-Ministry Employees  Churches should make a careful distinction between their paid workers who are acting as ministers versus those who are non-ministry employees. There are several considerations that can only apply to those who qualify as “ministers.” First, ministers can receive a clergy housing allowance, if properly designated, which shields a portion of…

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Surviving spouses not eligible for housing allowance

The housing allowance exclusion is available only to ordained clergy-not to surviving spouses. The tax return for the year in which a clergyperson dies may include, as an exclusion from the gross income of the clergyperson, a housing allowance exclusion for the full period of time the clergyperson was alive. That is, the death of…

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Housing – Fair Rental Value Limitation

In 1971, the IRS issued a Revenue Ruling which imposed the third factor upon clergy who own their own home: the amount excluded from gross income cannot exceed the fair rental value of the housing. This rule was added to Code section 107(2} itself in 2002. According to the above-referenced Revenue Ruling and current publications…

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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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Who is a Minister for Tax Purposes?

 A minister occupies a unique niche in the United State tax code.  He or she is considered an employee for income tax purposes, but self-employed for social security and Medicare.  In addition, a minister is eligible for a housing allowance that is not subject to income tax and has the choice to opt-out of social…

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