Browsing Category Taxes

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 ...

You’ve done it! You’ve fought the good fight, run the race with perseverance, and now the time has come to retire from your post. You did a good job and your church loves you. They want to bless you in this new season of life, so they write you a big check. While you’re thrilled and grateful, there’s one important question you need to answer before you start spending it: Do you have to pay taxes on your retirement gift?  Most ...

Today’s post was inspired by one of my loyal readers who had a very frustrating time trying to figure out the answer to that simple question. Unfortunately, I’m too late to come to his rescue, but my hope is that others of you may find this useful. It Doesn’t Work Like The Housing Allowance I think this subject may actually be harder for pastors than for others. Why? Because of the clergy housing allowance. The housing allowance is exempt from taxation. IRA ...

So, you’re entering the ministry and you’re excited. You’re excited to devote your life to God’s work. You’re excited to make an eternal impact on the world. And you’re excited to do your taxes in a completely new way. No, not really. If that kind of thing excited you, you would be a CPA instead of a pastor. Even though you’re new to pastoral ministry, you’ve probably already heard a thing or two about clergy taxes from seasoned veterans. And there’s ...

Thanks to the Tax Cuts & Jobs Act, people are paying a whole lot more attention to their tax withholdings this year. Employers had a hard time calculating withholdings with all the changes in the law and the result was far fewer people getting big tax returns (which I think is actually a good thing!) and more people owing. (Don’t get mad at the employers, though, no one really knew how it would all play out.) So, with this renewed interest ...

All pastors are subject to dual status taxation. What does that mean and how does it look when you file your taxes?

While pastors can no longer deduct unreimbursed business expenses on Schedule A, they can subtract them from their taxable income on Schedule SE. View post

The Tax Cuts & Jobs Act introduced a 20% deduction for qualified small businesses. As a pastor, even if you don’t have a side business, you may still be able to take advantage of it. View post

In just a few short weeks, tax season begins! Now, this isn’t like the Christmas season where everyone is giddy, singing, and trying to start it earlier and earlier each year. For most people, tax season is more akin to going to the dentist than to Disneyland.   This year, though, there is more excitement than normal. Why? Because we have new tax forms, thanks to the new law that was passed a year ago.   What, you don’t think that’s exciting? It’s ...

A recent court case helped to clarify when pastoral gifts are considered taxable income. Make sure you know how to classify your income to avoid owing penalties and back taxes. View post