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…
Can I deduct unreimbursed employee expenses?
“My last accountant told me I can’t deduct unreimbursed employee expenses, so I didn’t keep track of them.” This is a very common comment from new Clergy Financial Resources clients, and potentially a very costly error. While the Tax Cuts and Jobs Act did remove this schedule A deduction for the majority of employees, accountants…
What is an “Estimated Tax Penalty”?
An estimated tax penalty is a fee that IRS can charge you if you don’t pay your taxes in smaller increments throughout the year. Most W-2 wage earners don’t realize it, but their withheld tax is being sent to the government by their employer on a quarterly, monthly or semi-weekly basis. For self-employed individuals (like…
I work for many different churches and get paid on a 1099-MISC. Can I still designate a housing allowance?
Most ministers work for one church and receive a W-2. However, there are ministers who do not have a regular church and end up getting paid on a 1099-MISC during the year. This includes ministers doing pulpit supply and traveling evangelists. Can these 1099-MISC payments be eligible for a housing allowance? The answer is yes,…
Can I designate a housing allowance for multiple years?
A frequently asked question about Clergy Housing is whether a minister must re-designate their housing allowance every year or if they can simply enter a designation that covers multiple years. Surprisingly, Clergy are able to designate for periods longer than a single year. IRS does not specify how long a housing allowance designation must remain…
Are gifts for performing baptisms, weddings or funerals taxable?
Though they may be called “gifts” or “tokens of appreciation”, any money or gifts you receive for performing services like baptisms, weddings or funerals are actually considered taxable income in the eyes of the IRS and should be reported on your tax return. If you don’t want the additional income or tax that results from…
Can my severance pay be designated as housing?
Whether it is through resignation or retirement, a Church may agree to pay severance pay when a Minister leaves a position. In almost all cases, this severance pay is considered taxable income to the pastor or minister. The question then arises- could you designate this severance pay as housing? This is actually a question of…
When are my 2019 tax returns due?
With all of the last minute changes and automatic extensions that have happened due to COVID19, you may be wondering when your taxes are actually due. The filing and payment deadline of Federal return has been automatically extended to July 15th, 2020 due to the pandemic. If you cannot file by this date, you can…
How do I report Custodial Accounts?
If you have children, you may be the custodian on a savings or investment accounts in the name of your children. These accounts might generate interest or dividends. At the end of the year, how do you report the income and pay taxes on these accounts? Technically, any income resulting from these accounts belongs to…
Can retired ministers claim a housing allowance?
The answer is yes. Clergy can claim a housing allowance from their denominational pension distributions, per Revenue Rulings 72-249 and 75-22. Keep in mind, taking housing allowance out of retirement instead of clergy wages does not change IRS limitations on the housing allowance. The amount you get to exclude from income taxes is still limited…
