When should the church use Form 1099-NEC?
As another year comes to a close, there are many important things that need to be wrapped up before the end of the year. For your church, your to-do list must include year-end payroll duties. Beginning with the 2020 tax year, the IRS will require churches to report nonemployee compensation on the new Form 1099-NEC…
IRS Alert: Beware new text scam
IRS and state tax agencies recently issued a warning to taxpayers about a new scam being sent by text message, this time posing as a link for receiving an economic impact payment. The text message reads “You have received a direct deposit of $1,200 from COVID-19 TREAS FUND. Further action is required to accept this…
Is a gift of a holiday turkey taxable?
Many Churches and other employers like to give to their employees around the holidays. In most cases these gifts are taxable, but like almost all tax laws there are a few exceptions. According to IRS Publication 525, “If your employer gives you a turkey, ham, or other item of nominal value at Christmas or other…
Cell Phone Deductions for Ministers
If you are a minister, chances are you spend a lot of time on the phone, especially during the Pandemic. Fortunately, ministers can deduct these expenses on their schedule SE, but there are several things you have to keep in mind. First, you have to be subject to self-employment tax in order to take the…
FAQ: Why is my taxable income so low? How are taxable wages calculated?
When filling out applications for loans or student aid, a lot of clergy parents are surprised by line 1 of their tax return. Lenders frequently ask “Why are line 1 taxable wages so low?” The answer is usually the same: Clergy have low taxable wages reported on the 1040 return because of the housing allowance….
Are ministers employees or self-employed?
The answer is “both.” Ministers have what is commonly referred to as “dual tax status.” For federal income tax purposes, a minister is generally treated as a common-law employee. For payments into Social Security, the minister is always self-employed. This is an IRS regulation and not an election. When a church hires an employee, one…
Is Healthcare Sharing Tax Deductible?
If your church is experiencing some sticker shock with your 2021 health insurance increases, you’re not alone. Many people are searching for alternative healthcare solutions, including health reimbursement arrangements (HRAs) and healthcare sharing ministries. Healthcare sharing ministries are cost-sharing programs or private healthcare systems (PHCS) that are set up as a faith-based 501(c)3 not-for-profit organization. Members share religious…
Is it better to have an accountable or a non-accountable reimbursement plan?
If you are working as a pastor or minister, you probably have some expenses. They may be things like religious supplies, specialty clothing, or auto expenses. Some churches are able to reimburse these expenses, but take care; the way you structure these reimbursements has a big impact on your income taxes. There are two basic…
What is Honoraria and how do I report it on my taxes?
You may have heard the term “honoraria” refer to weddings, funerals, baptisms, or any number of other activities. But where does the term honoraria actually come from? The dictionary definition of Honoraria is “a payment for a service which custom or propriety forbids a price to be set.” There is usually no expectation or requirement…
FAQ: Can I use nursing home expenses for the housing allowance? Can I deduct them anywhere else?
For clergy who are living permanently in a nursing home, they can use some (but not all) of their nursing home expenses for the housing allowance. For example, the rental cost of their room and the utilities are eligible for the housing allowance. The food and medical care are not eligible for the housing allowance….
