Crowdfunding

Crowdfunding is a relatively new way to gather donations from others for things like mission trips. Well known examples of crowdfunding websites include “Gofundme”, “Kickstarter” and “Patreon”. Since it is so new, there is not a lot of official IRS guidance on the subject. According to an IRS letter published in 2016 (which you can…

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What is a Social Security Allowance?

If you are a member of the Clergy, you may have seen the phrase “Social Security Allowance” on your W-2 or it might be a part of your compensation package. But what does that mean exactly? To understand, we have to explain a difference between Clergy and Non-Clergy employees. Non-clergy employees have Social Security and…

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Are clergy subject to W-4 withholdings?

Filling out and submitting a Form W-4, the Employee’s Withholding Allowance Certificate, enables your church to withhold the correct amount of federal income tax for non-clergy compensation. Using the form, you calculate the number of allowances that you can claim on your taxes by totaling your dependents, deductions, and adjustments to withholding. Calculating the correct number…

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Are Clergy Gifts Taxable?

One common area of confusion for Clergy is the taxability of gifts. The US tax code explains that personal gifts are exempt from taxation (up to an annual dollar limit). Normal gift-giving out of affection from one individual to another is usually not taxable. If it were taxable, everyone would need to file a tax…

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Why Did I Owe Taxes This Year? Changes in 2019

In December of 2017 Congress passed the Tax Cuts and Jobs Act. This bill took effect for the first time for the 2018 tax year, those due on April 15 of this year. Although called “tax reform,” the TCJA focused on a trillion dollar tax cut. Among other changes this bill significantly lowered taxes, doubled the…

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How do I calculate my Self-Employment Taxes?

The Self-Employment Taxes that most members of the Clergy must pay quarterly are actually made up of two different taxes: Old-age, survivors and disability insurance (also known as “OASDI” or the more commonly used term “Social Security”) Medicare taxes OASDI taxes are calculated as 12.4% of your income. The maximum wage limit on OASDI is…

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Where’s My 1040 Refund?

While IRS issues the majority of taxpayer refunds in less than 21 days for electronically filed returns, in some cases return processing can be delayed. If it has been more than 21 days since your tax preparer electronically filed your return, or 6 or more weeks since you mailed in a paper copy of your…

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How do we pay nonexempt staff for after-hours communications?

Generally, non-exempt employees are paid hourly. We recommend instructing non-exempt employees to track all their time worked and prohibit working off the clock. Churches may use any timekeeping method they choose as long as it’s accurate and capturing all the required information (see below). For example, you may use a time clock, have a timekeeper keep track…

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What are Self-Employment Taxes?

If you are new to Ministry, it’s possible that you’ve never heard of self-employment taxes before, much less paid them. One common mistake for new Ministers is filing the 1040 without taking self-employment taxes into account, which can result in a big bill later when your 1040 return gets corrected by IRS. When you work…

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The Decision: Clergy or Non-Clergy

When a church hires an employee, one of the initial decisions that must be made is whether to treat the worker as clergy, non-clergy employee or contractor. This decision may seem insignificant, but it has huge implications when it comes to payroll. Ministers have what is commonly referred to as “dual tax status.” For federal…

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