FAQ for Clergy: What is the estimated tax penalty?
A couple questions that CFR gets every tax season are “Why am I getting assessed an estimated tax penalty?” and “What is an estimated tax penalty?” The US has a “pay as you go” tax system. Instead of paying your taxes in a lump sum, the IRS expects payments throughout the year. Most W-2 wage…
Cyber Security Tips: E-mail
When working with taxes, financial planning and retirement, you often have to provide sensitive information. You don’t want your social security number or finances released to the public, so it is important to take some precautions. While e-mail is a fast and easy way to send information, it’s not as secure as you may think….
IRS Issues Basic Guidance on Payroll Tax Deferral for Churches
The IRS has issued Notice 2020-65 deferring the withholding and deposit of the employee’s share of Social Security (OASDI) taxes on applicable wages. Specifically, the deferral applies to applicable wages paid on a pay date between September 1, 2020, and December 31, 2020. The availability of deferral is based on the date the employee is paid….
Can I take out a home equity loan and use that as an expense for the housing allowance?
Answer: Yes, you can use a new home equity loan for your housing allowance, but with some restrictions. The Internal Revenue Service allows ministers to use home equity loans as a housing expense, but only if the loan is used for direct housing-related expenses (i.e. for maintenance or the purchase of a home). If you…
If I pay off my mortgage, how does that affect the housing allowance?
Ministers who live in the same home for a long time may reach the point where they are paying off their mortgage. At this point, many ministers wonder how not having a mortgage will affect their housing allowance. Fortunately, you can still qualify for the housing allowance if you have paid off your mortgage. However,…
Is it a hobby or a business?
Whether it’s something they’ve been doing for years or something they just started to make extra money, taxpayers must report income earned from hobbies in 2020 on next year’s tax return. What the difference between a hobby and a business? A business operates to make a profit. People engage in a hobby for sport or…
FAQ: Can I only change my housing designation once a year?
No, you can change your designation at any time throughout the year, and you can amend it as needed. IRS details the housing allowance in section 107 of the Internal Revenue Code. While the IRS does not specify when you can designate, they do specify that designating must be done in advance. You can only…
CARES Act allows for coronavirus-related distribution from retirement
As the pandemic continues, many will experience economic hardship due to medical bills or due to a lost job. The CARES Act of 2020 provides some relief by allowing individuals to draw up to $10,000 from their retirement with minimized tax consequences. In order to qualify, you must meet one of the following criteria: Be…
Can a storage unit rental qualify for housing allowance?
Question – Can I claim storage unit rental as an expense related to housing allowance? Answer – No. IRS only allows expenses related to your primary residence. A separate storage unit is not attached to the home in any way, so it cannot be used as a housing expense. A similar situation occurs with utility…
Can I contribute to an HSA and an FSA at the same time?
Married clergy often have a choice of health options with their spouse. One common question is whether you can contribute to both an HSA and an FSA at the same time. The answer is usually no, but like most tax questions, there are a few exceptions. IRS publication 969 (https://www.irs.gov/pub/irs-pdf/p969.pdf) answers this question for us:…
