Browsing Category Taxes

On Friday afternoon, President Trump signed into law our nation’s largest-ever economic stimulus package, the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The bill will cost around $2 trillion and includes nearly $500 billion for rebate checks for individuals and families, another $500 billion to support severely damaged industries, nearly $400 billion dollars to provide tax credits for wages and payroll tax relief, over $300 billion to assist state and local governments, and almost $150 billion to support hospitals ...

I recently received an email from a pastor’s wife of 15 years asking for clarification on how their taxes were paid. She was too embarrassed to ask their tax preparer after all this time, so I was a safe place to turn. (If you have any questions, no matter how dumb you may think they are, I’d be happy to help!) She felt dumb asking, but it was unwarranted. Taxes for pastors are unusual and it’s very rare for someone to ...

We usually think of taxation as just a way for the government to raise funds for their many activities. But did you know that one of the stated purposes of taxation is to try to influence people’s behaviors? There are some things that the government feels are good for society and they want to encourage people to do them. How do they encourage them? Through tax breaks. Do you know why you get to deduct property taxes and mortgage interest when ...

Today is the big day! The IRS has officially opened the 2020 tax filing season for individual filers. We should throw a party! Better yet, let’s talk about how to go about filing those tax returns that they are now accepting. As a pastor, you have unique tax issues like the housing allowance and being dual status, so it’s not as easy for you as it is for others. You can’t just use any old tax software and trust that your ...

Tax season is just around the corner and that means I’m about to be inundated with tax-related questions. Today, I’m going to try to get ahead of the game and start answering the questions before you ask them. Up first, when is a pastor an employee or self-employed? Pastors Are Always Self-Employed For Social Security Taxes We’ll start with the easy part. When it comes to Social Security and Medicare taxes, also known as payroll taxes, you are always considered self-employed. Pastors ...

Back in 2017, the president timed things just right so that I spent the first day of my family’s Christmas vacation researching the tax reform bill and how it affects pastors. Now, almost two years to the day, he signed into law another sweeping financial reform just in time for me to fly down to visit my family for Christmas. Thanks, Congress, I really appreciate your timing. The Setting Every Community Up for Retirement Enhancement (SECURE) Act was signed into law ...

Every year, my church used to do a special offering in December as a Christmas gift for our senior pastor. As they said, why should he get a bunch of $10 gifts that he doesn’t even need when we can pool our resources so that he can buy something bigger that he really does want? It’s a good approach for everyone involved, even the IRS. You see, just because you and I call something a gift doesn’t mean the IRS doesn’t ...

It was 25 degrees Fahrenheit when I took my kids to the bus stop this morning. That’s freezing! Even though there were kids there in shorts and without jackets, for someone from Southern California like me, that’s a bit too much for my body to handle. My nose has already started running from subjecting myself to such unbearable temperatures.  Runny noses are one of those annoying yet inevitable parts of life. Kind of like taxes. One of those things you know ...

Growing up, there was one thing that I was always confused about. I would hear people mention April 15 as tax day, but it never made sense to me. You see, in my house, October was tax season. And that’s about as far away from April 15 as you can get.  My dad was a self-employed entrepreneur who was always behind on his “office work.” As such, he would file an extension for his tax return every year. You see, the ...

As we’ve discussed previously, churches are not required to withhold taxes for pastors and other clergy. Because of a minister’s dual taxation status, the IRS expects them to pay as if they were self-employed.  How do self-employed people pay taxes? Through quarterly estimated tax payments. So, as a pastor, you’re required to make quarterly estimated tax payments. What Are Quarterly Estimated Tax Payments? Our American tax system is a pay-as-you-go system. Many people don’t realize this because they think they only pay once a ...