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…
Employee Retention Credit – Expanded Eligibility
The Employee Retention Credit (ERC) offered relief to certain employers affected by COVID-19 in 2020, in the form of a fully refundable federal payroll tax credit. It was later extended to all four quarters of 2021, with certain changes – most notably the fact that Paycheck Protection Program (PPP) loan recipients can now claim these…
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…
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…
Sabbaticals and Compensation
Sabbaticals and Compensation Clergy members are among the professionals who are commonly given an opportunity to take a periodic break labelled as a “Sabbatical” after a a number of years of ministry service to their church. With the spiritual and emotional demands that often come with pastoring a church, it is indeed a good practice…
Church Liability and Insurance
My father was a small business owner when I was a child. I remember vividly one very bad day for his business. In the course of normal operations that day, the business received a summons indicating it had been sued by one of its customers. For a small business, this was disruptive news. Did the…
IRS to Delay 2021 Income Tax Filing Deadline to May 17
The IRS in January pushed back the start of tax season to Feb. 12. This gave the agency more time to prepare after December’s Covid relief bill, which included a second round of stimulus checks to Americans, that the agency was charged with delivering. The Internal Revenue Service announced today that the federal income tax…
Your Church’s Tax-Exempt Status
The details surrounding a church’s federal tax-exempt status can be confusing, especially when a specific question arises. The issue of tax-exempt status is important for two reasons. First, exempt status allows a church to avoid paying corporate taxes. Second, exempt status allows those who donate to the church to claim a tax deduction in certain…
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…
President to sign American Rescue Plan Act of 2021
The House and Senate have just passed the American Rescue Plan Act (ARP) and shortly the president is expected to sign it into law. This bill includes many provisions that have major tax impacts for 2020 and 2021 tax returns. 2020 tax-free unemployment benefits Initially, the bill didn’t include retroactive tax provisions, but during the…
