New law extends COVID tax credit for Churches
The Employee Retention Credit (ERC) is a refundable payroll tax credit for up to $5,000 per employee in 2020 and $28,000 in 2021. This temporary credit was enacted by the Coronavirus Aid, Relief, and Economic Security (CARES) Act and amended by the Consolidated Appropriations Act of 2021 (CAA). On March 11, 2021, the American Rescue…
IRS Refund Delays
Delayed Refunds Due to RRC Discrepancy Many clergy are still waiting on refunds when they filed their tax return in February. Some tax returns take longer to process than others, including when a return: Includes errors such as an incorrect recovery rebate credit (RRC) amount Was filed with missing information Is affected by identity theft…
Paycheck Protection Loan Forgiveness
Paycheck Protection Loan Forgiveness Many churches applied for and received a Paycheck Protection Program (“PPP”) Loan through the Small Business Administration to assist in retaining employees and paying other expenses during the COVID-19 pandemic. It is important to follow the appropriate steps in order to ensure that the loan is forgiven to avoid paying interest…
How to Correct Your Social Security Records
The Social Security Administration (SSA) automatically sends annual statements to workers and former workers. Taxpayers can also request statements at other times by completing Form SSA-7004, Request for Social Security Statement by calling 1-800-772-1213. All taxpayers should review their statements carefully. Any errors can be reported and corrected more easily the sooner they are found. …
How should employee files be organized?
We recommend having five separate files for each employee, as outlined below: I-9 file: Keep all Form I-9s in a separate master file or three-ring binder. Medical file: This file should contain everything related to an employee’s medical history, including health insurance enrollment forms. It’s important to separate this file because you cannot legally base…
Minister’s Spouse & Family Travel Expenses
During the summer months, ministers and their families often travel together. Sometimes a minister is able to combine a trip that is partially for vacation, and partially for a legitimate business purpose, such as attending a ministry-related conference or seminar. As long as the portion of the travel that is legitimately for business purposes is…
Don’t Miss These 3 Tax Deductions!
Top three Tax Issues for Ministers There are three unique aspects to a minister’s taxes. A minister occupies the unusual status of being a dual-status taxpayer. He/she is considered an employee for income tax purposes and self-employed for social security and Medicare. One implication starts the day he becomes employed as an ordained minister. The…
Paid Preparer or DIY Software?
Tax Software For Ministers A frequent mantra that I often repeat is “Minister’s taxes are not hard, they are just different.” Of course, easy is a relative term. For us, many tax returns are not difficult because we have prepared thousands of minister returns. Most people, including many preparers, do not know the differences…
What is Unrelated Business Income for Churches?
As a general rule, churches do not pay federal corporate taxes. This is by virtue of a church enjoying federal tax-exempt status under Section 501(c)(3) of the federal tax code. While churches are exempt from business taxes for their activities consistent with their exempt (religious) purposes, churches sometimes engage in activities that are unrelated to…
IRS Begins Correcting Tax Returns
The IRS will begin issuing refunds this week to eligible taxpayers who paid taxes on 2020 unemployment compensation that the recently-enacted American Rescue Plan (ARP) later excluded from taxable income. These corrections are being made automatically in a phased approach. The first phase of adjustments is being made for single taxpayers who had the simplest…
