What is the difference between standard and itemized deduction
It’s a good idea for people to find out if they should file using the standard deduction or itemize their deductions. Deductions reduce the amount of taxable income when filing a federal income tax return. In other words, they can reduce the amount of tax someone owes. Individuals should understand they have a choice of…
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…
Q&A – The rules for cellphone reimbursement
Q: “When it comes to reimbursing employees or providing a monthly stipend for the use of their personal cellphones for ministry purposes, is this a non-taxable fringe benefit?” A: Yes, provided that your reimbursement is reasonably calculated to actually reimburse the employees for the actual costs of maintaining the phone. Creating a policy for employee…
Accountable versus Non-Accountable Reimbursement Plans
If your Church helps to pay your clergy expenses, how they pay you makes a big difference when it comes to filing your 1040 tax return. Under an “accountable” plan, the Church only pays your exact expense. Either you submit receipts to them and they pay you the amount of the expense, or you use…
Clergy can still deduct unreimbursed business expenses!
If you are not a licensed tax professional, you probably get most of your tax news from friends, family or news programs. “I don’t have to track business expenses, I heard they are no longer deductible” has been a fairly common statement this tax season. But for Clergy, this statement is actually false! The Tax…
Sample Letter Explaining the 2020 Form W-4 to Employees
Beginning in January 2020, there will be a whole new look for the W-4 form, which is where workers tell their employers how much money to take out — or withhold — from their paychecks for federal income taxes. The biggest change to the W-4 form is the removal of the allowances section. You’ll no longer…
Are Mandatory Tithes a Deductible Business Expense?
Donating to Charity is normally listed as an itemized deduction on Schedule A, but some Churches also require a tithe in their terms of employment. Is mandatory tithing deductible for clergy as an unreimbursed business expense against self-employment taxes? The question matters a lot. With the increased standard deduction of the Tax Cuts and Jobs…
2019 E-filing Opens January 27th!
For you go-getters and early risers, IRS will start processing 2019 tax returns on January 27th of 2020. There are some valid reasons to delay filing, though. You may not have all of your tax documents yet. You may still be considering contributing more to a retirement account. And some state and federal tax changes…
