FAQ: Can I stop my church from taxing me as a Minister?
When confronted with the additional self-employment tax burden that clergy face, many ministers ask the question “Can I just tell my church to tax me as a normal employee?” Unfortunately, whether you are taxed as a Minister is determined primarily by the functions of the position. IRS lists five criteria to determine if a position…
Clergy Moving Expenses Q&A
This Q&A has been developed to provide general information for churches and clergy who may have questions about the change in federal tax law concerning moving expense payments. Q: How does the new law change moving expense payments? A: The moving expense exclusion and the individual deduction were both eliminated for tax years 2018 through…
Basic steps to start a new business
Understanding the tax responsibilities that come with starting a business venture can save you money and help with success. Choose a business structure The form of business determines which income tax return a business taxpayer needs to file. The most common business structures are: Sole proprietorship: An unincorporated business owned by an individual. There’s no distinction between…
The separation of accounting duties
There are three functions of the accounting process that should be performed by different individuals: the recording of transactions, the authorization of transactions, and the custody of assets. As an example, when writing a ministry check, the functions of printing the check (recording), signing the check (authorization), and reconciling the bank statement (custody) should be…
Guide to Clergy Compensation
Clergy Status is a person who has been granted ecclesiastical authority by an association, denomination, or state through the rite of ordination, commissioning, or licensing. 1. Generally, an ordained minister has a Master of Divinity from an accredited theological school and is recognized through the rite of ordination to preach and teach the gospel, to…
Can I still claim my dependent if they live at school and are on scholarship?
In order to claim someone as your dependent, there are five tests: relationship, age, residency, support and joint return. Most of these tests are pretty straightforward, but we get a very common question about residency: “If my dependent is away at college for nine months out of the year and gets a scholarship, can I…
Are student scholarships taxable?
If you or your dependent receives a scholarship, a fellowship grant, or other grant, all or part of the amounts you receive may be tax-free. Scholarships, fellowship grants, and other grants are tax-free if you meet the following conditions: You or your dependent is a candidate for a degree at an educational institution that maintains…
Should my church outsource our bookkeeping?
Church bookkeepers have for a long time been confused with accountants. They, however, carry very different responsibilities. Bookkeepers maintain the financial records of the church that includes income and expense records. They are supposed to keep records of the dates and amount of every transaction of the church. It is also their task to keep…
I use a computer for ministry work and personal purposes, can I deduct it?
Many ministers purchase computers to use for their ministry work but also end up using them for home e-mails or other personal purposes. Are you able to deduct the purchase of a computer that is used both for work and for home? The answer is yes, a portion of it can be deductible. When deducting…
I received an adjustment notice from IRS
IRS is starting to issue adjustment letters on 1040 returns that were filed back in April. If you receive one of these notices, don’t panic. Instead, follow these simple steps to figure out what to do. Read the letter in full. It should explain what part of the return they are adjusting, whether it is…
