Form 1040

How a Housing Allowance Works on Minister Taxes

Ministers provide an array of services for members of their churches as well as for their communities. Many believe that ministers are under-compensated for the selfless work that they provide and as a result the IRS has given clergymen certain tax-exempt benefits on their taxes including a tax-exempt housing allowance. All expenses for housing including furniture and maintenance can be legally deducted as long as ministers plan accordingly in advance and provide the IRS with detailed and adequate record-keeping. And while minister taxes allow for a housing allowance that is exempt from federal and state income taxes, it is still… Continue reading

Tax Preparation for Ministers: Self-Employed vs. Employee

The life of a pastor can be difficult yet extremely rewarding. They have been called to minister to others therefore they do what they can to ensure that they are prepared  for whatever situations they are faced with. Until it comes to minister tax issues. These are issues that they must deal with but usually aren’t prepared for.

Many minister tax issues are hinged on whether or not they are considered self-employed or an employee of their church. The difference between the two makes a big difference when it comes to yearly tax preparation, as well as how deductions… Continue reading

Determining Housing Allowance on Minister Taxes

There are a number of tax exemptions that ministers can benefit from as long as ministers are aware of these exemptions. One of the most common is a tax exempt housing allowance. All expenses for housing which includes furniture and maintenance can be deducted legally. Here is how to determine if you are eligible and how to go about it. 

Determine Eligibility

A minister is defined by the IRS as a person who is “duly ordained, commissioned, or licensed minister of a church.” Religious employees that don’t have these credentials are not eligible for the housing allowance.

Deductions

Once… Continue reading

Estimating Tax Payments for 2012 Taxes

If you currently have income that is not subject to tax withholding, you are inevitably dealing with estimated tax payments. A very common example of those dealing with estimated tax payments are church pastors. Pastors taxes often involve estimated payments and it is imperative that these be submitted accurately and in a timely manner to ensure that you’re not underpaying taxes and therefore avoiding penalties for underpayment.

Tips for Estimating Tax Payments for 2012 Taxes 

Determine your expected adjusted gross income by taking last year’s income and adjusting based off of any changes you experienced during the current year.… Continue reading