A lot of people treat budgets like New Year’s resolutions. They are lofty and unrealistic goals with only an 8% chance of becoming reality. But that’s not how it’s supposed to be. Budgets are supposed to be personalized money management tools that help you take control of your finances. If you don’t have a greater sense of control and empowerment, then your budget isn’t working. If you don’t have the kind of budget I’m talking about, then you really need one. Follow this link to learn how to make a budget that serves as a GPS and not a jail cell. Once you’ve got your GPS budget going, here are a few simple ways to make budgeting easy and effective: View post

The clergy housing allowance is touted as the greatest tax benefit available to pastors. And it really is a great benefit. I learned back in 2019, though, that it can have a dark side. Not a Darth Vader using the Force to crush you kind of a dark side, more like a "If I hadn't claimed so much, I'd be $1,000 richer" kind of dark side. The problem is how it can affect the Additional Child Tax Credit, which is a major benefit for pastors with children. How The Clergy Housing Allowance Affects The Child Tax Credit One of the provisions of the tax reform that passed 5 or so years ago, one of the few points that everyone liked, was the doubling of the Child Tax Credit (CTC). Kids used to be worth $1,000 each and now they are worth $2,000. That still doesn’t feel like enough when your child is ...

The clergy housing allowance is by far the most common topic that I receive questions about. Here are 10 or the most common questions answered to help you get the most value out of your housing allowance: How does a housing allowance work? You, the pastor, calculate what your housing costs will be for the year and submit it to your church. Your church approves the housing allowance and does not include it as taxable income in box 1 of your W-2. You track your housing expenses throughout the year. Add any excess housing allowance to your taxable income on your tax return when you file. If you have not opted out of Social Security you need to include the housing allowance amount as income when calculating your self-employment taxes. What expenses can be included in the housing allowance? A housing allowance can cover: Down payment on a home purchase Mortgage principal ...

One of the benefits of being a pastor is getting to claim an income tax-free housing allowance. Not having to pay income taxes on part of your income can be a great benefit, so it's one I always recommend that pastors maximize. But how do you maximize it? What Is The Maximum Allowed Housing Allowance? The first step in maximizing your housing allowance is knowing how much you’re allowed to claim in the first place. There are limits and some people have ended up in tax court for disregarding them.  Your maximum allowed housing allowance is the least of: the amount actually used to provide or rent a home; the fair market rental value of the home (including furnishings, utilities, garage, etc.); the amount officially designated (in advance of payment) as a housing allowance; or an amount that represents reasonable pay for your ministerial services. How To Calculate Your Housing Allowance Limit Therefore, to figure out what size ...

Insurance is one of those things that no one gets excited about. It’s like brushing and flossing your teeth; the few people who are really into it make a career out of it and the rest of us just go along with it because it’s the adult thing to do. But no matter how you feel about it, insurance is important to protect you from financial ruin, just like good dental care can save you from gum disease.  Today we’re going to talk about homeowners insurance specifically. This is a must for anyone who owns a home. Even if you don’t have a mortgage company telling you to buy it, you need it. I’m telling you to buy it. All it takes is one broken pipe to sink your finances and I don’t want that to happen to you. You can even use your housing allowance to pay the premiums, which ...

People over 50 are eligible to make extra contributions to their 403(b) plans. However, some plans even let younger people make extra contributions. Here is everything you need to know regarding eligibility, limits, etc. for making extra contributions to your 403(b). View post

There are 3 foundational things that you can start developing in your children from an early age that will help make college less of a burden on your budget. View post

The following is an excerpt from my book, The Pastor’s Wallet Complete Guide to the Clergy Housing Allowance: The IRS says it’s still possible to claim a housing allowance even after you retire and stop receiving a paycheck. Unfortunately, there is no clear law or hard and fast rules about this. There is little guidance and not a lot of certainty, so what we do know is cobbled together from various Revenue Rulings issued by the IRS.  Even in retirement, the rules that the housing allowance must be provided as payment for ministerial services and designated in advance by a qualifying organization still apply. Based on the information available to us, this is how those two requirements work themselves out in retirement: The allowance must be provided in payment for services that are ordinarily the duties of a minister of the gospel. According to the IRS, the housing allowance of a retired minister ...

Yes. There you have it, shortest blog post ever. But in all seriousness, this is an important matter that can make a huge difference during your retirement. If you didn’t take saving for retirement seriously during your early years, even just receiving a little help from the Social Security Administration could make a big impact your monthly income in retirement. Sounds great. So how does it work? Well, there are two ways: View post

https://youtu.be/qOU7x0PEA1I Additional principal payments are qualified expenses for the clergy housing allowance, but they are subject to limitations.