Are your church workers classified correctly?
Churches may soon face increased scrutiny relating to employment classifications. The Treasury Inspector General for Tax Administration found in a recent study that 19 percent of small business employers didn’t comply with IRS rulings on worker status. This percent may be higher among churches. We recommended that your church review and increase compliance with employee…
Cost of Living Adjustments for Clergy Income
With so many line items making up a clergy’s compensation package, how exactly does one apply a cost of living adjustment (COLA) to their salary package. When a COLA is given to a clergy’s salary, the adjustment is made on their base + housing.  Since housing is a fixed number, the total adjustment is added…
Is an activity a hobby or a business
Many clergy(and their spouses) participate in activities(outside their main job) that create additional sources of income. Â Is it a business or a hobby in the eyes of the IRS? The tax implications of that classification can vary greatly. Below are some questions to ask yourself when trying to determine if an activity is a business…
Housing Provided for Student Clergy – Taxable or Not?
Like other fringe benefits, free or discounted church-provided lodging is usually subject to income and other taxes. To determine the fair market value of the housing provided to an intern, the church may check local newspaper listings for comparable rental properties or ask a local realtor for an estimate of the property’s rental value. The…
Health Care Information on my W-2?
When you get your 2011 W-2, you might notice some new information on the form. Box 12 is where the church will report the cost of your group health insurance coverage. This amount is both the amount the church pays as well as the premiums paid via payroll deductions. The amount, which will be designated…
Tax Documents Necessary to File
Statements are on the way from employers, banks, stockbrokers and other institutions and agencies that were involved in taxpayers’ financial lives last year. Each of these groups has, by law, until Jan. 31 to get their annual tax statements in the mail to you. Many taxpayers now receive these documents electronically. So be sure to…
Keep the IRS off your back this month – W-2 & 1099 Filing
It’s time to mail out those W-2s and 1099s again. Yes, it feels like a waste of time and money, but pay attention: The IRS takes this very, very seriously. It’s a January ritual as inevitable as the collapse of New Year’s resolutions: The mailing of W-2s and 1099s. While your employees may regard their…
Taxable or Non-Taxable Clergy Income?
Generally, most income you receive is considered taxable but there are situations when certain types of income are partially taxed or not taxed at all. All sources of income are fully taxable and must be included in your income unless it is specifically excluded by law. To help clergy understand the differences between taxable and…
Missing a W-2? Here’s What To Do….
Ministers working for a church or church agency should receive a Form W-2 by January 31, 2011. Ministers who report their federal income taxes as self-employed on Form 1099, may face a significant risk of additional taxes and penalties, if they are audited and reclassified as employees by the IRS. Before you file your 2010…
Unrelated Business Income Tax (UBIT)
Churches and religious organizations may engage in income-producing activities unrelated to their tax-exempt purposes, as long as the unrelated activities are not a substantial part of the organization’s activities . However, the net income from these unrelated business activities will be subject to the “Unrelated Business Income Tax” if the following three conditions are met:…
