Can clergy living in a parsonage receive a parsonage allowance?
Pastors living in parsonages should be provided with a “parsonage allowance.” Even in a parsonage, every pastor has some expense in maintaining his or her home. The amount of the allowance may depend on several factors: whether or not the parsonage is furnished, who provides the upkeep, pays the utilities, etc. When the parsonage allowance…
Housing Provided for Student Clergy – Taxable or Not?
Like other fringe benefits, free or discounted church-provided lodging is usually subject to income and other taxes. To determine the fair market value of the housing provided to an intern, the church may check local newspaper listings for comparable rental properties or ask a local realtor for an estimate of the property’s rental value. The…
Secular and Clergy Employment Status…What’s the difference?
Churches are required to classify each person that is hired as either a secular or clergy employee. This is a very crucial step in the hiring process. Clergy are taxed differently than secular employees and this treatment is mandated by law. It isn’t optional, so it is important to know who qualifies as secular or…
IRS Updates Mileage Rates for 2013
The Internal Revenue Service has issued the 2013 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes. Beginning on Jan. 1, 2013, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be: 56.5 cents per…
Social Security Tax Increase Starting January 1, 2013
Over the past two years, there has been a “payroll tax holiday” in effect. This reduced the employee’s share of Social Security from 6.2% to 4.2%. This “payroll tax holiday” is scheduled to expire on December 31, 2012. Non-clergy employees will have an additional 2% of Social Security tax withheld from their paychecks starting on…
What would happen if the “housing allowance” exclusion was eliminated?
How much money does the IRC 107(clergy housing allowance/parsonage tax exclusion) actually save clergy? After running a few scenarios, the outcome may surprise you. In each scenario, we calculated the amount of tax paid by the clergy in two ways. First, their taxes are calculated as if the housing allowance/parsonage exclusion was eliminated(secular employee). This…
Kids going to a day camp this summer? Get a tax break!
Most working parents are well aware they get a tax break to help cover the costs of sending their children to day care. But some parents overlook the tax advantage of summer day camp costs. During school vacations, many parents turn to these supervised programs to provide child care while they work. Overnight camps don’t…
IRS Has $1 Billion for People Who Have Not Filed a 2008 Income Tax Return
WASHINGTON — Refunds totaling more than $1 billion may be waiting for one million people who did not file a federal income tax return for 2008, the Internal Revenue Service announced today. However, to collect the money, a return for 2008 must be filed with the IRS no later than Tuesday, April 17, 2012. The…
Hunting for a New Ministry Position Could Help Cut Taxes
Your search for new work in the ministry must be in the same field in which you’re currently or were formerly employed. Seminary graduates are out of luck. The costs you incur in getting your first job aren’t deductible, because the tax law only allows you to write off expenses incurred in searching for another…
Appeals Court Rejects Multiple Housing Allowance Decision
On Wednesday February 8, 2012, the Eleventh Circuit Court of Appeals in Atlanta overturned a decision made by the United State Tax Court(Commissioner vs. Driscoll) regarding the ability for a clergy to claim more than one home as a housing allowance tax exclusion. In May 2010, a United State Tax Court finalized a ruling, from…