Qualifying Housing Expenses – IRC Section 107
Under IRC Section 107, the term “housing expense” for ministers includes costs associated with providing and maintaining a home. Unfortunately, the IRS has not published a defined list. Here are some detailed examples of specific expenses that can be considered for maintaining a home under IRC Section 107: Rent or Mortgage Rent Payments: Monthly payments…
Understanding Mixed Travel: Personal/Ministry Travel
To determine if you can take a tax deduction for travel expenses that include both personal and business elements, you must evaluate whether the trip is primarily for business purposes and whether the expenses are ordinary and necessary in the conduct of your trade or business. Primary Purpose of the Trip: Business vs. Personal: The…
Church Administrators: Managing Clergy Reimbursements
A church office administrator should handle reimbursement for clergy through an accountable reimbursement plan. Here are the key steps to follow: Establish a Written Policy: Create a written expense reimbursement policy that outlines which expenses are eligible for reimbursement. This policy should include ministry-related expenses such as travel, office supplies, religious materials, meals, and professional…
IRC Section 107 Housing Expenses for RV Owners
A minister’s housing (or parsonage) allowance under IRC 107 is excludable from gross income only to the extent it is used to rent or otherwise provide a bona fide “home”—that is, a dwelling place complete with the usual amenities (such as furnishings and, for example, a garage) as indicated in the statute and regulations (IRC 107; § 107,…
15 Questions Related to a New Call
How does the church’s social security allowance compare to other similar-sized churches? Are there limits or guidelines for the accountable or nonaccountable reimbursement plan? What other travel-related expenses does the church cover besides auto mileage? Are there specific guidelines or a budget for ministry and professional-related expenses? What are the expectations for the pastor’s involvement…
2025 Housing Allowance Tips
Who is Eligible for a Housing Allowance? According to the IRS definition, clergy who are duly ordained, commissioned, or licensed by a recognized religious body constituting a church or church denomination. Does the Church Have to Approve It? Housing allowances for a qualifying religious organization must be designated in advance, clearly defined, and specified before…
Estimated Tax – Safe Harbor Rules
Because clergy are exempt from tax withholding on their paychecks, they will usually need to make Estimated Tax Payments throughout the year to ensure that their taxes are paid. If you don’t do it, it can result in penalties. If you expect to owe at least $1,000 in tax for 2025 AND all of your…
Qualified Charitable Distributions
A Required Minimum Distribution (RMD) refers to the minimum amount that must be withdrawn annually from retirement accounts such as traditional IRAs, 401(k)s, 403(b)s, and other qualified retirement plans, starting in the year the account holder turns 73 (or 70½ if they turned that age before January 1, 2020). The purpose of RMDs is to…
The Windfall Elimination Provision (WEP)
The Windfall Elimination Provision (WEP) The Windfall Elimination Provision (WEP) reduction has been effective since it was first enacted in 1983. However, it’s important to note that recent legislation has repealed the WEP. The Social Security Fairness Act, signed into law on January 5, 2025, ends the WEP effective December 2023. The Windfall Elimination Provision…
Tips for hiring a clergy accountant
Hiring a clergy accountant involves several considerations to ensure they are well-versed in the unique financial aspects of religious organizations: Expertise: Make sure the accountant has relevant experience with clergy or nonprofit organizations. Ask about their understanding of clergy-specific tax laws and church-specific financial matters, such as housing allowances and restricted gifts. Recommendations: Get recommendations…
