Which health reimbursement plan is right for your church?
The Health Reimbursement Arrangement (HRA) model has made it possible for more churches to provide health care benefits for their employees with complete control of the costs and provide a pre-tax benefit to their employers. There are multiple HRA types to choose from, such as the One-Person Health Reimbursement Arrangements (HRA), Qualified Small Employer Health Reimbursement Arrangement…
When should the church use Form 1099-NEC?
As another year comes to a close, there are many important things that need to be wrapped up before the end of the year. For your church, your to-do list must include year-end payroll duties. Beginning with the 2020 tax year, the IRS will require churches to report nonemployee compensation on the new Form 1099-NEC…
IRS Alert: Beware new text scam
IRS and state tax agencies recently issued a warning to taxpayers about a new scam being sent by text message, this time posing as a link for receiving an economic impact payment. The text message reads “You have received a direct deposit of $1,200 from COVID-19 TREAS FUND. Further action is required to accept this…
Are ministers employees or self-employed?
The answer is “both.” Ministers have what is commonly referred to as “dual tax status.” For federal income tax purposes, a minister is generally treated as a common-law employee. For payments into Social Security, the minister is always self-employed. This is an IRS regulation and not an election. When a church hires an employee, one…
Is Healthcare Sharing Tax Deductible?
If your church is experiencing some sticker shock with your 2021 health insurance increases, you’re not alone. Many people are searching for alternative healthcare solutions, including health reimbursement arrangements (HRAs) and healthcare sharing ministries. Healthcare sharing ministries are cost-sharing programs or private healthcare systems (PHCS) that are set up as a faith-based 501(c)3 not-for-profit organization. Members share religious…
The Parsonage Allowance
IRC § 107 provides an exclusion from gross income for a “parsonage allowance,” housing specifically provided as part of the compensation for the services performed as a minister of the gospel. This includes the rental value of a home furnished to him or her as part of compensation or a housing allowance, to the extent…
What is the housing allowance?
A licensed, commissioned, or ordained minister who performs ministerial services as an employee may be able to exclude from gross income the fair rental value of a home provided as part of compensation (a parsonage) or a housing allowance provided as compensation if it is used to rent or otherwise provide a home. A minister…
Non-taxable benefits for ministers
Disability Insurance – The church can reimburse its pastor for this premium or pay it directly. Health Insurance – Group health insurance plans are a qualified fringe benefit. If the church does not qualify for a group plan because there is only one employee, you will need to establish either a One Person Health Reimbursement…
Penalty abatement from the IRS?
Due to COVID-19, the due date for filing your 2019 tax return was postponed to July 15, 2020. If you didn’t request an extension of time to file or send in your tax return by July 15, the IRS may charge a failure to file penalty. If you didn’t pay your taxes by July 15, the IRS…
Clergy Moving Expenses Q&A
This Q&A has been developed to provide general information for churches and clergy who may have questions about the change in federal tax law concerning moving expense payments. Q: How does the new law change moving expense payments? A: The moving expense exclusion and the individual deduction were both eliminated for tax years 2018 through…
