Are clergy subject to W-4 withholdings?
Filling out and submitting a Form W-4, the Employee’s Withholding Allowance Certificate, enables your church to withhold the correct amount of federal income tax for non-clergy compensation. Using the form, you calculate the number of allowances that you can claim on your taxes by totaling your dependents, deductions, and adjustments to withholding. Calculating the correct number…
Documenting Clergy Meal Expenses
As Self-Employed individuals, members of the clergy are allowed to deduct some out-of-pocket ministry expenses on Schedule C or Schedule SE. One expense that many forget to track is the meal expense. If you are meeting others for church-related discussions or activities, you can deduct 50% of the meal costs on your return. If you…
Are Clergy Gifts Taxable?
One common area of confusion for Clergy is the taxability of gifts. The US tax code explains that personal gifts are exempt from taxation (up to an annual dollar limit). Normal gift-giving out of affection from one individual to another is usually not taxable. If it were taxable, everyone would need to file a tax…
Donating Honoraria to Charity
When working as a Minister for weddings, funerals, baptisms or other speaking engagements, it is common to receive payments as gratitude. The payments for these services are collectively referred to as honoraria. Some Ministers do not wish to receive any money for their service, so they donate the money they receive to the church or…
Five Tips for Claiming Ministry Mileage
For those who do not have a reimbursement plan for mileage, or for those who have some mileage that they pay for out of pocket, here are some quick tips about claiming mileage as a deduction: You cannot deduct normal commuting expenses to and from your main church/regular place of work. If you make a…
Why Did I Owe Taxes This Year? Changes in 2019
In December of 2017 Congress passed the Tax Cuts and Jobs Act. This bill took effect for the first time for the 2018 tax year, those due on April 15 of this year. Although called “tax reform,” the TCJA focused on a trillion dollar tax cut. Among other changes this bill significantly lowered taxes, doubled the…
What Expenses Can Be Used to Justify the Housing Allowance Exclusion?
Generally, any expense to provide or maintain the home can be used to justify the housing exclusion. Regulations do specifically state that expenses for groceries, paper products, personal toiletries, personal clothing, and maid service cannot be used. You may legitimately include the following: (1) rent, principal payments, or down payments plus the cost of buying the home; (2) taxes…
What is the Estimated Tax Penalty?
The United States has a “pay-as-you-go” tax system. Rather than waiting for the end of the year to get their taxes, the government wants taxpayers to pay smaller portions of tax throughout the year. For most wage-earners, they don’t even need to think about it- Their employer takes money out of their paycheck and pays…
Professional Clothing Tax Deductions
Prior to 2018, everyone could potentially claim a deduction on Schedule A for unreimbursed work-specific clothing and laundering expenses. After the Tax Cuts and Jobs Act, most employees lost this deduction, but Clergy can still deduct these costs on their Schedule SE. However, there are still restrictions in place on the deduction. First, the expense…
How do I calculate my Self-Employment Taxes?
The Self-Employment Taxes that most members of the Clergy must pay quarterly are actually made up of two different taxes: Old-age, survivors and disability insurance (also known as “OASDI” or the more commonly used term “Social Security”) Medicare taxes OASDI taxes are calculated as 12.4% of your income. The maximum wage limit on OASDI is…
