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Nontaxable income for clergy

These are examples of sources of income that are non-taxable:

• Qualified love gifts (person-to-person and within limits)

Cannot be solicited
Must be spontaneous in nature
Must be clearly ascertainable as a gift with no service attached
Cannot qualify as a tax donation for the donor
Are motivated out of affection of an individual for another individual

• Professional reimbursements through an accountable plan
• Health reimbursement plans (HRA)
• Housing allowance (federal only)
• Fair rental value of the parsonage (federal only)
• Utilities paid by the church (federal only)
• Flexible spending arrangements
• Ministry expenses only relating to sabbatical compensation
• Group health insurance
• Health saving accounts paid through the church (HSA)
• Ministry mileage reimbursements from an accountable plan
• QSEHRA and ICHRA
• Group life insurance <50,000
• Nominal value Christmas or holiday gifts
• Section 127 Education and student loan payments

Pension payments or retirement allowances received by a minister under a retirement plan of his church are not includible in his net earnings from self-employment for self-employment
tax purposes.

Other kinds of income may be taxable under certain circumstances, but not taxable in other situations.

Contact Clergy Financial Resources to help you with the next steps.

Clergy Financial Resources
Tax I Payroll I Bookkeeping I HR
11214 86th Avenue N.
Maple Grove, MN 55369

Tel: 1 (888) 421.0101
Fax: 1 (888) 876.5101

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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.

For more information or if you need additional assistance, please use the contact information below.

Clergy Financial Resources
11214 86th Avenue N.
Maple Grove, MN 55369

Tel: (763) 425-8778 
Fax: (888) 876-5101
Email: clientservices@clergyfinancial.com

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If you would like to learn more about our tax services designed for clergy or payroll, bookkeeping or HR designed for churches, please complete the request form to have an advisor contact you.

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