SECURE Act removes limit on age for retirement contributions
If you are retired or nearing retirement, you may want to pay attention to the SECURE Act that went into effect January 1st of 2020. This act made a number of important changes to retirement account rules, including: Raising the minimum distribution age to 72 (Was previously 70 and a half) Removing the age limit…
Moving and getting paid for expenses? It can result in more taxes.
If you are moving to a new call and your Ministry is willing to help pay for moving expenses, you should be aware that it could actually cost you additional taxes! Under the Tax Cuts and Jobs Act, moving expenses paid by your employer are not only NOT deductible, but they are also considered taxable…
Qualified Charitable Distributions can help with RMDs
For those who have reached 70 ½ and must take Required Minimum Distributions, you have the option of donating your RMD to charity rather than claiming the income for yourself. Because the RMD is being donated directly to a charity, it does not count as taxable income to you. This also means that you do…
Misconceptions about the Housing Allowance
The Housing Allowance is a great tax benefit available to Clergy, but it is not widely understood. Here are some common misconceptions about the Clergy Housing Allowance. 1. If I don’t spend all of the housing allowance, I will have to pay a penalty. False. The Housing Allowance is just the portion of your wages…
New 2020 W-4 – Line by Line Instructions
The new version of the 2020 Form W-4, Employee’s Withholding Certificate, was issued Dec. 4, 2019. Employees filling out the form no longer are to be able to claim any withholding allowances. The one-page Form W-4 is divided into five instructional sections: Step 1, Enter Personal Information, includes Steps 1a, 1b, and 1c; Step 2,…
Two months until 1040 tax deadline…
Valentine’s Day is almost here. While most people are thinking of flowers and chocolates, your friendly, neighborhood tax preparer is already thinking about April 15th. IRS e-filing has officially opened and is now accepted returns. More importantly, official tax documents like W-2s and 1098 forms should have been received by now. The majority of taxpayers…
Can retired ministers claim a housing allowance?
The answer is yes. Clergy can claim a housing allowance from their denominational pension distributions, per Revenue Rulings 72-249 and 75-22. Keep in mind, taking housing allowance out of retirement instead of clergy wages does not change IRS limitations on the housing allowance. The amount you get to exclude from income taxes is still limited…
What is the difference between standard and itemized deduction
It’s a good idea for people to find out if they should file using the standard deduction or itemize their deductions. Deductions reduce the amount of taxable income when filing a federal income tax return. In other words, they can reduce the amount of tax someone owes. Individuals should understand they have a choice of…
Do I have to report income that is less than $600?
Yes. A common misconception or myth is that if you are paid less than $600 in a year, then you don’t have to report this income on your tax return. The truth is that $600 is just the threshold for the employer providing a formal 1099-MISC form to you and to the IRS. Even if…
How do tax brackets work?
“You don’t want to earn too much- that’ll put you in a higher tax bracket.” You may have heard this particular piece of tax advice before. While earning more money can technically put you into a higher tax bracket, that isn’t as bad as it sounds. The United States has a progressive tax system, where…
