IRS Releases 2019 Standard Mileage Rates

The Internal Revenue Service (IRS) released the 2019 standard mileage rates. Beginning January 1, 2019, the standard mileage rates for the use of a car (vans, pickups or panel trucks) will be: 58 cents per mile for ministry or business miles driven, up from 54.5 cents for 2018 20 cents per mile driven for medical, up from…

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Clergy pay social security as self-employed

Determining the correct social security tax for clergy is often confusing. Clergy pay social security tax under the Self-Employment Contributions Act (SECA), not under the Federal Insurance Contributions Act (FICA). Clergy engaged in the exercise of ministry are always treated as self-employed for social security tax purposes. A congregation should never deduct FICA tax from the pay of a…

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Suits and Vestments

Generally, a taxpayer may deduct the cost of uniforms as a business expense if the taxpayer must wear them on the job and they are not suitable for street wear.  In Ratcliff,  the Tax Court denied a minister a deduction for suits worn to church because the church did not require them. Rather, the wearing of a…

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Who Is a Minister?

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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Flat-dollar Reimbursements Taxable

Question: Employees often use their personal cell phones for church business. The church requires that they submit monthly expense reports and they’re reimbursed through an accountable plan. The church board wants to ditch the paperwork and just pay flat-dollar allowances to employees every month. Would that be taxable? Answer:  Yes, the allowances would be taxable because…

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What should the church include as income on a pastor’s W-2?

The first thing to understand is that the income tax code takes the position that any money paid to or for an employee is income unless specifically excluded by the tax code. In addition to the pastor’s base salary, there are some items the church may provide as fringe benefits to the pastor or other employees that…

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How To Create A Cell Phone Reimbursement Policy

Creating a policy for employee mobile phone reimbursement can be tricky. Unlike the rules surrounding other ministry expenses, IRS regulations governing employee cell phone use are ambiguous and in a state of flux. To date, no single model of cell phone reimbursement has become an industry norm. Churches need to carefully consider the model through…

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How the 90-Day Mileage Log Rule Works

Often in an IRS audit, the examiner will ask for your mileage log at the beginning of the audit. If you do not have a mileage log, then you are in danger of losing more than just vehicle deductions. Think about it. If you don’t have a log for mileage, what is the IRS examiner…

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Don’t Let Your Tax Receipts Fade

Are your receipts too faint to read? This is a common problem with the thermal paper receipts that many restaurants use. Over time the images disappear, and if you leave them in the sun, you can almost watch the ink leave the thermal paper. Protect yourself. You need to scan or photocopy the thermal paper…

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Can Nursing Home Expenses be Claimed as Housing Allowance?

If the clergy person is a permanent resident of the nursing home, the housing allowance applies to the nursing home because the nursing home is the minister’s primary residence. Charges for food and medical care are not considered housing expenses. Ask the administrator of the residence to provide the portion of their monthly payments that…

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