What goes in my Box 1 Wages?
Clergy W-2 forms can be a little confusing, and almost every Church seems to do them a little bit differently. And even filling them out requires a little bit of tax knowledge about what is and what is not taxable. Box 1 of the W-2 should include everything that you need IRS to consider as…
Top 10 Clergy W-2 Mistakes
Correctly filing Clergy taxes can be difficult, especially because many W-2 forms already contain errors or omissions. Here are ten common mistakes that are made when issuing Clergy W-2 forms. Forgetting to remove 403(b) contributions from taxable wages. The wages that Clergy defer into their traditional 403(b) retirement accounts should not be taxed. Forgetting to…
How do I report Custodial Accounts?
If you have children, you may be the custodian on a savings or investment accounts in the name of your children. These accounts might generate interest or dividends. At the end of the year, how do you report the income and pay taxes on these accounts? Technically, any income resulting from these accounts belongs to…
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…
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…
8 questions about employee expense reimbursements
The IRS knows full well how lax a lot of employees are about documenting their expenses—and how often churches let it slide. We have collected a handful of recent questions that may be helpful to your church. Q. If an employee uses a personal credit card for a ministry purchase, is there a time limit…
Hiring Contractors? Get the W-9 Upfront!
Hiring Contractors? Get the W-9 Upfront! Churches that hire contractors have a requirement to obtain their Tax ID Number on form W-9 if they will have to issue a 1099-MISC to them. However, Churches may not know at the beginning of the year if they will pay more than $600 and need to send the…
“Can our Church give benevolence gifts to the Pastor/employee of the Church?”
This is an area where Clergy Financial Resources would advise caution. In order to maintain their tax exempt status, Churches have to use their resources to pursue charitable goals. The Internal Revenue Code strictly forbids the use of Church assets or income to benefit individuals who have a close relationship with the Church. This is…
