I received a Lilly Grant, is it taxable?
The Lilly Endowment Clergy Renewal Program provides an opportunities for pastors to step away briefly from the persistent obligations of daily parish life and to engage in a period of renewal and reflection. This grant is up to $50,000, and all or part of the amount received may be tax-free based on the allocation of these funds: Pulpit Supply – Maximum…
Saving Money with an HSA
If you’re looking to save some tax dollars and pay for your medical expenses at the same time, a Health Savings Account is one of the best options currently available. One of the reasons that a Health Savings Account is useful is because of how difficult it can be to get a deduction for medical…
I made a mistake on my 1040 return!
Mistakes can happen on your taxes. Maybe your employer gave you a W-2 that was incorrect. Maybe you forgot to record $500 that you got paid for a wedding last summer. Maybe you accidentally typed 510 as 150 on your notes and underreported income. Regardless of what happened, here are some tips for amending your…
I missed the 1040 extension deadline, now what?
If you extended your 1040 tax return to October 15th and then missed the extension deadline, you may be concerned about what happens to you. If you are due a refund on the return, there is no penalty for missing the deadline. IRS penalties for late filing and late payment do not apply if you…
Can a Minister deduct home office expenses and receive a housing allowance?
The answer to this question is no. A 1964 Tax Case (Deason v. Commissioner) stated that any deduction related to tax-exempt income cannot be claimed. Deducting income for clergy housing and then deducting again for a home office at that same location would amount to taking a double deduction, which is not allowed. In general,…
October 15th Extension Deadline
The deadline to file your extended 1040 return is approaching fast. Here are some things to keep in mind for last-minute filers: The extension to file is not an extension to pay. If you owe on your tax returns, you may have some penalties and interest if you waited until October to pay. Even if…
What is the difference between Traditional and Roth retirement plans?
Let’s talk about how you actually put money into the retirement plan. In a traditional retirement plan, money is put into the plan PRE-TAX, before any taxes are deducted. This can reduce your taxable income for the year, but doesn’t mean that you actually avoid the tax on that income. You end up having to…
What is the difference between a 401k, a 403b, and an IRA?
The world of retirement plans can be a little confusing if you aren’t familiar with the lingo. First, there are employer sponsored plans. In an employer sponsored plan, the employee has money taken out of their paycheck to put into the retirement plan. The employer may also offer to contribute a matching amount. Different types…
Top Three Clergy W-2 Mistakes
Listing wages or withholdings in Boxes 3 through 6. Clergy are treated like self-employed individuals in regards to Social Security and Medicare taxes. They should not have taxable Social Security or Medicare wages, and they should not have Social Security or Medicare withholdings. Including the Housing or Parsonage allowance in places that it shouldn’t be….
No Time Like the Present to Make Amends (to your Tax Returns!)
If you find out that you forgot to report something on your tax return or you get a corrected W-2, it’s not the end of the world. You will probably just have to amend your tax returns to include the correct information. However, there are some very important reasons why you should submit amendments as…
