Are Clergy Subject to Self-employment tax
Clergy are dual-status employees and are not eligible to have FICA taxes withheld from their church compensation. In lieu of FICA taxes, clergy are subject to self-employment tax (SECA) which is calculated and paid on their tax return. Reimbursements from an employer of SECA are taxable as wages. Note, however, that even though clergy pay SECA…
Should I Opt-Out of the Advance Child Tax Credit
Child Tax Advance Credit Update Recently many news outlets have been reporting a new “stimulus payment” coming in July. This has caused some confusion. There are no current plans for a fourth economic impact payment (EIP), but instead, the press is calling the upcoming advance child tax credit (CTC) payments a “stimulus payment.” Earlier this…
Are Churches Exempt From All Filing Requirements
Filing Church Information Updates Though most churches are exempt from filing annual federal tax returns, there are other filings that are sometimes overlooked by churches. Many states require any incorporated entity, including a church, to file a periodic information update with the Secretary of State or other agency. Failure to file this update in a…
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…
