A new Call can be exciting, but the logistics of moving and setting up in a new location can stressful, even before thinking about your taxes. Here are a few things to consider when moving to a new location.
Moving Expenses are not deductible
Regardless of whether your Ministry pays you or pays the movers directly, Moving Expenses are not deductible in 2018 (except for active duty military relocation). This also means that any money the Church gives you to pay for moving will be taxable. If it is negotiable, you may want to consider having the Church pay a little more to cover both the moving expenses and the taxes that result from the additional income.
Designate your Housing Allowance
One of biggest tax benefits currently available to Clergy is the Housing Allowance. However, you must have the Church designate the allowance in writing in order to take advantage of it. Since you have not worked in your new location before, you will have to have the Church board (or whoever is in charge of the finances) approve your Housing Allowance in the budget and/or meeting minutes. Our Housing Allowance Worksheet is a useful resource that you can use to record approval of your allowance.
Ask How Professional Expenses are Paid
If you have to pay ministry-related expenses, will you have to pay out of pocket? Does the Church reimburse you? If the Church pays you a flat amount for professional expenses regardless of how much you spend, then that money has to be included as taxable income on your tax return. If the Church requires you to submit reports and only pays you for what was purchased, then that is considered an “Accountable Plan” and neither the income nor the expenses are reported on your taxes. Generally speaking, Accountable Plans are more beneficial.
Ask How Automobile Expenses are Paid
The same questions apply to auto expenses. If the Church pays you a flat amount for automobile expenses regardless of the distance travelled, then that money has to be included as taxable income on your tax return. If the Church requires you to submit mileage reports and only pays for the distance you travel, then that is considered an “Accountable Plan” and neither the income nor the expenses are reported on your taxes. Generally speaking, Accountable Plans are more beneficial.
If you have more questions about moving, want someone to review your compensation package, or need assistance making the transition as easy as possible, Clergy Financial Resources can help. Our Pro Advisor Support offers three different levels of service, so you can get the answers you need.
Clergy Financial Resources serves as a resource for clients to help analyze the complexity of clergy tax law, church payroll & HR issues. Our professionals are committed to helping clients stay informed about tax news, developments and trends in various specialty areas.
This article is intended to provide readers with guidance in tax matters. The article does not constitute, and should not be treated as professional advice regarding the use of any particular tax technique. Every effort has been made to assure the accuracy of the information. Clergy Financial Resources and the author do not assume responsibility for any individual’s reliance upon the information provided in the article. Readers should independently verify all information before applying it to a particular fact situation, and should independently determine the impact of any particular tax planning technique. If you are seeking legal advice, you are encouraged to consult an attorney.
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