Can a nonexempt employee be paid a salary?
Can a nonexempt employee be paid a salary? Yes, a nonexempt employee can be paid on a salary basis rather than by the hour. However, this arrangement can be challenging to manage in practice. Paying a nonexempt staff member a set salary does not make them exempt from overtime. They must still receive overtime pay…
Coordinating the Home Office Deduction and Housing Allowance
Home Office Deduction and the Clergy Housing Allowance: How They Work Together Many ministers ask whether they can claim a home office deduction while also benefiting from a clergy housing allowance. The good news is that it is possible to claim both, provided the rules for each are met and the two benefits are coordinated…
Housing allowance policy for your employee handbook
Housing allowance policy for your employee handbook Below is a Housing Allowance Policy suitable for inclusion in a church or ministry Employee Handbook. It is written in neutral language and reflects IRS requirements found in Section 107 of the Internal Revenue Code (no external citations needed for policy documents). Housing Allowance Policy (For Ministers and…
Rolling over my denomination’s plan to an IRA?
Can I roll my denomination’s investment plan to an IRA? Under IRS rules, you cannot receive a housing allowance designation from an IRA, even if the funds originally came from ministerial compensation. Housing allowance treatment is only permitted when the retirement plan itself is a “church plan,” typically a 403(b)(9), and the designating body is…
Were you age 73 or older during 2025?
Were you age 73 or older during 2025? Required Minimum Distributions (RMDs) apply to traditional IRAs and most employer‑sponsored retirement plans once a participant reaches age 73. In the first year RMDs are required, the distribution does not need to be taken by December 31. Instead, the initial RMD must be withdrawn no later than…
2026 Housing Allowance Guide
2026 Housing Allowance Guide Now Available The Housing Allowance Exclusion permits clergy to set aside a portion of their compensation specifically for housing expenses, shielding that amount from federal income tax. By reducing taxable income, clergy can significantly lower their overall tax burden. Although this exclusion is one of the most valuable tax advantages available to ministers,…
New Auto Loan Interest Deduction
The New Auto Loan Interest Deduction for 2025 Beginning with the 2025 tax year, millions of Americans will encounter one of the most notable tax changes in decades: the new federal Auto Loan Interest Deduction, created under the OBBBA. This new provision offers a potentially valuable deduction for qualifying taxpayers—yet it comes with strict rules,…
Turbo Tax Software
Three key areas to get it right Whether it’s TurboTax, TaxAct, or H&R Block, tax preparation software is generally affordable when compared to hiring a qualified tax professional. These programs are also designed to be efficient, often allowing users to complete and file a return in just a few hours. However, ministers should be aware…
How to Select the Right Clergy Tax Preparer
How to Select the Right Clergy Tax Preparer Clergy face some of the most complex tax situations of any profession. Dual tax status, housing allowances, self‑employment rules, parsonage issues, and ministry‑related reimbursements all require specialized knowledge—knowledge that many general tax preparers simply don’t have. Choosing the right professional isn’t just about filing on time; it’s…
When Are W‑2 and 1099 Forms Required to Be Filed.
When Are W‑2 and 1099 Forms Required to Be Filed Churches function as employers, contractors, and ministry organizations—but despite their nonprofit status, they are not exempt from federal payroll reporting laws. The IRS requires churches to properly classify workers and file W‑2 and 1099‑NEC forms each year, just like any other employer. Failing to follow…