Must Churches File for 501(c)(3) Tax Exemption?
The Internal Revenue Code section 508(c) sets out that churches are automatically recognized as tax-exempt under 501(c)(3), and the IRS does not require churches to apply for tax-exempt status if they meet the following criteria: a distinct legal existence; a recognized creed and form of worship; a definite and distinct ecclesiastical government; a formal code…
Contributions for Short-Term Mission Trips
It is a common practice for churches to raise funds to send volunteers on short-term mission trips. The funds are often raised by a participant preferenced for his or her own trip expenses, as opposed to raising the funds for the group of volunteers as a whole. Tax-deductible contributions for short-term missionary trips must be made “to or for…
Student Loan Forgiveness Creates New Tax Trap
There’s a new student loan repayment program that forgives some student loan debt if other payments are made. This new debt forgiveness is creating a tax surprise for the unsuspecting student. Here is what you need to know. The debt forgiveness program dilemma to combat the hardship of high student loan debt, a popular new…
Ministers Defined by the IRS
When a church hires an employee, one of the initial decisions that must be made is whether to treat the worker as clergy, non-clergy employee or contractor. This decision may seem insignificant, but it has huge implications when it comes to payroll. Ministers have what is commonly referred to as “dual tax status.” For federal…
Is a Pastor’s Retirement Gift Taxable?
Federal tax law requires all forms of compensation to be reported as taxable income unless specifically excluded by law. Gifts are one such exclusion. The question, then, is whether retirement gifts are taxable compensation for services rendered or tax-free gifts. This answer is not always clear. In a series of cases in the early 1950s,…
IRS Increases Annual Gifts Tax Exclusion
For starters, you can give gifts valued up to the annual gift tax exclusion amount each year without ever touching the lifetime exemption. For 2017, the exclusion was $14,000 per recipient. In 2018, it increased to $15,000 per recipient. The federal gift tax applies to the giver of a gift, not the recipient, for amounts…
Property Tax Exemption for Parsonages
Some states exempt parsonages from property taxes which can either be homes owned by churches and occupied by clergy who serve a local church. California California property tax laws provide for three exemptions that may be claimed on church property: • The Church Exemption, for property that is owned, leased, or rented by a religious…
2018 Brings Change to 529 College Savings Plans
The Tax Cuts and Jobs Act, which was signed into law in December 2017, allows families to use 529 plans to pay for up to $10,000 in tuition expenses at elementary or secondary public, private or parochial schools. The changes became effective January 1, 2018. 529 plans offer tax-free earnings growth and tax-free withdrawals when the…
Important Tax Deadlines and Dates
April 17, 2018 2017 Individual Tax Returns Due E-file or postmark your individual tax returns by midnight April 18, 2018. 2017 Tax Extension Form Due Need more time to prepare your tax return? File your request for a tax extension by April 17 to push your tax deadline back to October 15, 2018. Clergy Financial Resources now…
Learn more about filing a tax extension
The Internal Revenue Service allows taxpayers to file for a 6-month extension if they need more time to prepare their tax return. You can obtain a tax extension for any reason; the IRS grants them automatically as long as you complete the proper form on time. If you found yourself unable to meet the document deadline…