What type of housing expense records should clergy be keeping?
Ideally, clergy should keep careful housing expense records to determine whether expenses are greater or less than the annual designation. Records are also important for estimating a reasonable housing allowance for the next year. Original receipts, invoices, canceled checks, charge card records, etc. are all essential. To simplify record keeping, some pastors find it helpful to have one charge…
Does your Church Want to Pay Tax on Employer Parking?
Churches and other historically tax-exempt organizations may need to file federal and likely state income tax returns according to a recently unearthed provision in the newly instituted Tax Cuts and Jobs Act that applies the federal income tax to parking benefits. Hundreds of organizations are now calling for its repeal. Section 512(a) (7) addresses this new…
Dos and Don’ts for Clergy Who Get a Letter from the IRS
Every year the IRS mails thousands of letters to clergy for many reasons. Here are some tips and suggestions: Don’t ignore it. Most IRS letters and notices are about federal tax returns or tax accounts. Each notice deals with a specific issue and includes specific instructions on what to do. Don’t panic. The IRS and…
Is it really the IRS calling on your business?
Many taxpayers have encountered individuals impersonating IRS officials – in person, over the telephone and via email. Don’t get scammed. We want you to understand how and when the IRS contacts taxpayers and help you determine whether a contact you may have received is truly from an IRS employee. The IRS initiates most contacts through…
Why is the second quarter of estimated quarterly taxes only two months?
Estimated taxes used to be paid based on a calendar quarter, but in the 60’s the Oct due date was moved back to Sept to pull the third quarter cash receipts into the previous federal budget year which begins on Oct 1 every year, allowing the federal government to begin the year with a current…
Court Rulings Regarding Charitable Contributions—
Tax Court Denies Deduction for a Member’s Contributions to His Church A tax court denied a church member’s charitable contribution deductions to his church for lack of substantial information. The church member claimed that his bank savings account register was proof that he made charitable contributions because it showed these withdrawals. The court denied these…
What is the Difference Between FICA and SECA?
Social Security taxes or contributions are collected under the Federal Insurance Contributions Act (FICA) and the Self-Employment Contributions Act (SECA). Many people refer to contributions to Social Security as either FICA or SECA taxes. While FICA and SECA may sound similar, they are just two different ways for the government to collect Social Security and Medicare taxes. The big…
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…
