In December of 2017 Congress passed the Tax Cuts and Jobs Act. This bill took effect for the first time for the 2018 tax year, those due on April 15 of this year. Although called “tax reform,” the TCJA focused on a trillion dollar tax cut. Among other changes this bill significantly lowered taxes, doubled the standard deduction and changed the rates and income cutoffs for all tax brackets.

To reflect these changes the IRS adjusted its withholding tables for 2018. In doing so, the agency reduced the amount it withheld from the average worker’s paycheck. This caused people to keep slightly more of their money on a per-paycheck basis. 

However, the IRS cut its withholding further than it has in the past. As a result, the Government Accounting Office has estimated that up to 30 million taxpayers had too little taken out of their paycheck. By the end of the year they hadn’t yet paid all of their taxes through payroll withholdings. If you had a surprise tax bill in 2019, this is why. Their taxes have probably not gone up, the IRS simply took less money from them over the course of the year.

Clergy are subject to estimated tax payments on a quarterly basis which include federal, social security and state taxes. For example, when you receive clergy income in the first quarter of the year, the taxes are due at the end of that quarter. The year is divided into four payment periods, or due dates, for estimated tax purposes which are listed below. Clergy can also elect to have income taxes withheld from their compensation by means of voluntary withholding agreements which may simplify the budgeting.

Payment 1 – April 15th (January through March)
Payment 2 – June 15th (April through June)
Payment 3 – September 15th (July through September)
Payment 4 – January 15th (October through December)

Is this your first ministry position? Are you moving? Have you had a change in your compensation? Let us calculate your estimated payments or optional withholdings . This service will ensure that your tax liabilities are paid on time and no surprises at the end of the year. 

Clergy Financial Resources serves as a resource for clients to help analyze the complexity of clergy tax law, church payroll & HR issues. Our professionals are committed to helping clients stay informed about tax news, developments and trends in various specialty areas.

This article is intended to provide readers with guidance in tax matters. The article does not constitute, and should not be treated as professional advice regarding the use of any particular tax technique. Every effort has been made to assure the accuracy of the information. Clergy Financial Resources and the author do not assume responsibility for any individual’s reliance upon the information provided in the article. Readers should independently verify all information before applying it to a particular fact situation, and should independently determine the impact of any particular tax planning technique. If you are seeking legal advice, you are encouraged to consult an attorney.

For more information or if you need additional assistance, please use the contact information below.

Clergy Financial Resources
11214 86th Avenue N.
Maple Grove, MN 55369

Tel: (888) 421-0101 
Fax: (888) 876-5101
Email: clientservices@clergyfinancial.com