Tax Exemptions

Clergy Taxes: Tax Advantages for Ministers

Working as a minister has many benefits, including reaching out to and ministering to a wide array of people who are seeking help and guidance. In addition to helping others, members of the clergy are also eligible for a number of tax benefits as well. These benefits were created for members of the clergy in order to ensure that they were being reimbursed adequately for the important work that they do. Therefore it’s important that pastors are aware of the tax advantages that they are eligible to receive.

Here are some of the tax advantages that can be applied to… Continue reading

Ministers to Foreign Workers: How to Qualify for a Social Security Exemption

As a member of the clergy you are given the opportunity of exemption from Social Security taxes. Most working citizens are required by law to pay Social Security taxes on their income, however, pastors fall into a few specific groups of people that are exempt. If you are a credentialed minister, opposed to any form of public insurance due to religious beliefs, and are working at a tax-exempt religious organization, you may be exempt from paying Social Security taxes.

There are several groups of people that are eligible for Social Security exemption aside from pastors including foreign workers, students, and… Continue reading

Clergy Finances: Pastor Retirement Options

Throughout their careers, people will often begin preparing and saving for retirement, this is true for pastors as well. At some point in time a pastor will no longer be able to work on a full-time basis but just like everyone else, will need some form of financial compensation to ensure quality of life for him and his family.

These options may or may not be similar to more traditional workers’ options but just like when it comes to pastors taxes and clergy finance, pastor retirement options are still just as effective albeit slightly more non-traditional.

SIMPLE or Roth IRA’s… Continue reading

Clergy Finances: Unemployment Benefits for Pastors

The nation’s unemployment rate is a hot topic. Regardless of what profession or industry one works in, there is always the chance for losing one’s job. This scenario is no different for church pastors. They may find themselves without a job due to the economy, changes within their church or for a variety of other reasons. The difference when it comes to clergy finances is that if pastors find themselves out of work they are rarely eligible for unemployment benefits.

Churches and other religious organizations are exempt from participating in a majority of state unemployment programs. Therefore, since they don’t… Continue reading

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

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

How to Make Sure Clergy Social Security Exemption is Approved

If they choose, clergymen are allowed social security exemption based on religious objections. However, in order for this to happen, they need to correctly fill out IRS Form 4361 in order to be exempt. It’s important that this form be filled out in an accurate and timely manner. Here are some tips on how to correctly fill out the form and reasons why it may be denied.

Unless they fill out a Form 4361 clergymen normally pay out social security taxes just like anybody else who is employed and earns taxable income. The IRS, however, allows church ministers to file… Continue reading

Ordained Minister Tax Advantages and Benefits

As an ordained minister you may be eligible for a number of tax advantages that you may not be aware of and that are not available to people outside of the ministry. Minister tax benefits were originally instituted to help clergymen as they were originally paid quite poorly.  Ministers that are ordained have the option of taking a number of tax deductions and opting out of payments that others are expected to make as long as certain IRS qualifications are met. Here are several such minister tax benefits.

Exempt from Self-Employment Taxes

When income is received from a church,… Continue reading

Tax Preparation for Missionaries

Serving God and spreading the Good News often requires going outside of your comfort zone and even overseas in order to spread the Word. If God is leading you to teach the masses as a missionary, it’s necessary to consider everything that being a missionary entails which also includes proper tax preparation.

According to IRS Tax services, missionaries fall under the definition of ministers. Ministers and missionaries both are people that are considered ordained by a licensed religious group to conduct religious worship, administer ordinances and follow a church’s prescribed system of beliefs. Therefore a missionary is responsible for filling… Continue reading