Understanding Taxable Income Rules for Sabbatical Pay
Sabbatical payments made to a minister are generally treated by the Internal Revenue Service (IRS) as taxable compensation rather than exempt benefits. Although sabbaticals are often intended for rest, study, or renewal, the IRS views the payments as primarily personal in nature. Because the minister remains employed during the sabbatical, any salary continuation, stipend, or…
Are You a Household Employee?
Are You a Household Employee? When you work in someone’s home—whether as a nanny, caregiver, housekeeper, or gardener—you may wonder how the IRS classifies your role. Understanding whether you are a household employee or an independent contractor is crucial because it directly affects your tax responsibilities and your employer’s obligations. What Defines a Household Employee?…
Determining the Fair Rental Value of Clergy Housing
A common approach to estimating the fair rental value (FRV) of clergy housing is to apply a fixed percentage—often 12% to 15%—of the home’s current value. A more reliable alternative is to use methods such as a comparable rental analysis or a comparable sales evaluation performed by a qualified third party. Under IRC § 107,…
Kingdom Impact 5 Podcast – Early Winter Recap
In November and December, Kingdom Impact 5 Podcast rolled out 4 episodes you won’t want to miss. In under 5 minutes, the Kingdom Impact 5 podcast takes a deep dive into a topic to help your ministry stay compliant, confident, and financially strong. From IRS regulations and payroll best practices to bookkeeping tips and tax…
HSA vs. Itemized Medical Deductions: Which Offers More Benefit?
QUESTION: Is there an advantage to setting up on HSA and contributing post tax dollars to it and deducting on my tax return? Versus simply tracking my medical expenses and deducting them without the HSA? ANSWER: There is a significant advantage to using a Health Savings Account (HSA), even if you contribute with post-tax dollars…
Why You Should Update Your W-4
Your Form W-4 determines how much federal income tax is withheld from your paycheck. Keeping this form up to date ensures that your tax withholding matches your current situation—helping you avoid surprises at tax time. Several major life events can significantly impact your tax liability. If any of the following apply to you, it’s a…
Year-End Giving Rules for Churches
Churches must follow IRS rules when handling year-end giving. This includes issuing donor receipts by January 31, ensuring contributions are properly documented, acknowledging gifts over $250 in writing, and maintaining accurate records for compliance and transparency Contribution Statements Deadline: Churches must issue annual giving statements to donors by January 31 of the following year. These…
Your Guide to FSA Contributions
Reporting Flexible Spending Account (FSA) contributions on a W-2 depends on the type of FSA and who made the contributions. Here’s a breakdown: Where to Report FSA Contributions on Form W-2 Dependent Care FSA Box 10: Report the total amount of dependent care benefits provided to the employee, including: Amounts the employee elected to contribute…
Matching Contributions: The 403(b)(9) Advantage
The Match Game for 403(b)(9) Retirement Plans The Match Game show started on December 31, 1962. The premise of the show was simple. The contestant with the most matching answers with the celebrity panelists won the game and moved on to the “big money round”. Contestant or celebrity, there is another match game that clergy…
Guide to Housing Allowance Compliance
Housing Allowance Checklist for Clergy and Churches Board Approval Ministers may exclude a designated portion of their income as a housing allowance from federal income taxes—provided it compensates ministerial services. The church board (or governing body) must determine eligibility and formally approve the allowance before the calendar year begins or prior to the minister’s start…
