IRS Releases New Tax Withholding Estimator

The IRS has released an enhanced Tax Withholding Estimator that incorporates changes from the redesigned Form W-4, Employee’s Withholding Certificate. The new Form W-4 includes changes that can affect employees’ refunds or the amount of tax they owe. For example, income tax withholding is no longer based on the employee’s marital status and withholding allowances,…

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Hiring Contractors? Get the W-9 Upfront!

Hiring Contractors? Get the W-9 Upfront! Churches that hire contractors have a requirement to obtain their Tax ID Number on form W-9 if they will have to issue a 1099-MISC to them. However, Churches may not know at the beginning of the year if they will pay more than $600 and need to send the…

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As the Year Begins, Tax Scams are on the Rise

Tax season isn’t until April, but tax scammers are already looking to take advantage of the upcoming tax season. Here are five quick tips to help avoiding tax scams this year: Be suspicious of anyone that says you must pay or face immediate foreclosure, seizure, jail time, or deportation. Tax scams tend to be very…

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Who qualifies for “Clergy Status”

The employing congregation, denomination, integral agency of a denomination or a church, or religious organization is responsible to determine whether an individual qualifies as clergy status under the federal law definition. Having “minister” in the title or ministerial duties in a job description is not enough. The IRS uses the five criteria listed below to…

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Medical Deduction Threshold Raised to 10% for 2019

Claiming a medical deduction on your 2019 return is going to be even more difficult than on your 2018 return. Previously, taxpayers needed to itemize and spend at least 7.5% of their adjusted gross on unreimbursed medical expenses before they got to deduct anything. Now the threshold has been raised to 10% of your adjusted…

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Health Care Penalty Removed, but Premium Tax Credit Still in Play

Before 2019, individuals were required to enroll in qualifying health insurance or they would receive a tax penalty. This was called “minimum essential coverage”. You may remember receiving a 1095 form showing all the months that you had coverage. If you didn’t have insurance or you had an insurance gap, you also might have received…

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IRS updates mileage rates for 2020

The Internal Revenue Service issued the 2020 standard mileage rates that ministers can use to calculate the deductible costs of operating their automobile for ministry or business. This rate can also be used by churches to reimburse mileage. Starting on Jan. 1, 2020, the standard mileage rates for the use of a car (along with…

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“Can our Church give benevolence gifts to the Pastor/employee of the Church?”

This is an area where Clergy Financial Resources would advise caution. In order to maintain their tax exempt status, Churches have to use their resources to pursue charitable goals. The Internal Revenue Code strictly forbids the use of Church assets or income to benefit individuals who have a close relationship with the Church. This is…

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Common Payroll Errors to Avoid

Let’s face it. Managing church payroll – and the avalanche of payroll regulations – means you’re under a lot of scrutiny, and you have to get it right. Each year sixty percent of the church W-2 forms are reported with errors. This is created by the lack of understanding of the reporting requirements of taxable…

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How do I report income that straddles two years?

With the end of 2019 approaching, we frequently receive questions about income split between different years. “My church is paying for my moving expenses. They gave me a two checks for $1,000. Can I wait to cash one or both until January 1st so the payments go on next year’s tax return?” “My Church was…

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