Church Pro Advisor Support
Researching a clergy tax law, church payroll & HR or bookkeeping issue on your own takes time and can leave you wondering if you’ve got the right answer. Turn to Clergy Financial Resources to save time while getting the correct answers. Most callers want answers to specific questions, interpretations of new laws or maybe you don’t have…
When Should I Start Collecting Social Security?
Social Security benefits are typically computed using “average indexed monthly earnings.” This average summarizes up to 35 years of a worker’s indexed earnings. The Social Security department applies a formula to this average to compute the primary insurance amount (PIA). The PIA is the basis for the benefits that are paid to an individual. The…
Must Churches File for 501(c)(3) Tax Exemption?
The Internal Revenue Code section 508(c) sets out that churches are automatically recognized as tax-exempt under 501(c)(3), and the IRS does not require churches to apply for tax-exempt status if they meet the following criteria: a distinct legal existence; a recognized creed and form of worship; a definite and distinct ecclesiastical government; a formal code…
Contributions for Short-Term Mission Trips
It is a common practice for churches to raise funds to send volunteers on short-term mission trips. The funds are often raised by a participant preferenced for his or her own trip expenses, as opposed to raising the funds for the group of volunteers as a whole. Tax-deductible contributions for short-term missionary trips must be made “to or for…
Student Loan Forgiveness Creates New Tax Trap
There’s a new student loan repayment program that forgives some student loan debt if other payments are made. This new debt forgiveness is creating a tax surprise for the unsuspecting student. Here is what you need to know. The debt forgiveness program dilemma to combat the hardship of high student loan debt, a popular new…
Ministers Defined by the IRS
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…
Is a Pastor’s Retirement Gift Taxable?
Federal tax law requires all forms of compensation to be reported as taxable income unless specifically excluded by law. Gifts are one such exclusion. The question, then, is whether retirement gifts are taxable compensation for services rendered or tax-free gifts. This answer is not always clear. In a series of cases in the early 1950s,…
IRS Increases Annual Gifts Tax Exclusion
For starters, you can give gifts valued up to the annual gift tax exclusion amount each year without ever touching the lifetime exemption. For 2017, the exclusion was $14,000 per recipient. In 2018, it increased to $15,000 per recipient. The federal gift tax applies to the giver of a gift, not the recipient, for amounts…
Property Tax Exemption for Parsonages
Some states exempt parsonages from property taxes which can either be homes owned by churches and occupied by clergy who serve a local church. California California property tax laws provide for three exemptions that may be claimed on church property: • The Church Exemption, for property that is owned, leased, or rented by a religious…
2018 Brings Change to 529 College Savings Plans
The Tax Cuts and Jobs Act, which was signed into law in December 2017, allows families to use 529 plans to pay for up to $10,000 in tuition expenses at elementary or secondary public, private or parochial schools. The changes became effective January 1, 2018. 529 plans offer tax-free earnings growth and tax-free withdrawals when the…
