Retired Ministers can still claim housing allowance
One of the best tax benefits currently available to clergy, the housing allowance, isn’t just limited to wages. Did you know that you can claim a housing allowance from your denominational pension distributions as well? When a minister retires and starts taking funds from their denominational pension, they can potentially receive the funds income-tax-free as…
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…
New Bill – Give Ministers the Opportunity to Opt-in to Social Security
Congressman Kevin McCarthy recently held a press conference with local pastors about his newly introduced bill, the Clergy Act. This bill would offer ministers – many of whom opted out of paying into Social Security in their youth – a two-year “open season” to effectively opt-in to Social Security. McCarthy released the following statement: “In…
SECURE Act removes limit on age for retirement contributions
If you are retired or nearing retirement, you may want to pay attention to the SECURE Act that went into effect January 1st of 2020. This act made a number of important changes to retirement account rules, including: Raising the minimum distribution age to 72 (Was previously 70 and a half) Removing the age limit…
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…
Misconceptions about the Housing Allowance
The Housing Allowance is a great tax benefit available to Clergy, but it is not widely understood. Here are some common misconceptions about the Clergy Housing Allowance. 1. If I don’t spend all of the housing allowance, I will have to pay a penalty. False. The Housing Allowance is just the portion of your wages…
New 2020 W-4 – Line by Line Instructions
The new version of the 2020 Form W-4, Employee’s Withholding Certificate, was issued Dec. 4, 2019. Employees filling out the form no longer are to be able to claim any withholding allowances. The one-page Form W-4 is divided into five instructional sections: Step 1, Enter Personal Information, includes Steps 1a, 1b, and 1c; Step 2,…
Two months until 1040 tax deadline…
Valentine’s Day is almost here. While most people are thinking of flowers and chocolates, your friendly, neighborhood tax preparer is already thinking about April 15th. IRS e-filing has officially opened and is now accepted returns. More importantly, official tax documents like W-2s and 1098 forms should have been received by now. The majority of taxpayers…
Can retired ministers claim a housing allowance?
The answer is yes. Clergy can claim a housing allowance from their denominational pension distributions, per Revenue Rulings 72-249 and 75-22. Keep in mind, taking housing allowance out of retirement instead of clergy wages does not change IRS limitations on the housing allowance. The amount you get to exclude from income taxes is still limited…
