Tax preparation is challenging for the general public, but it can be even more complicated for members of the clergy. Unfortunately, the 2018 tax reform has muddied the waters even further; clergy members who had a firm grasp on what was legal (and what was not) are faced with changes that, if not adhered to, can lead to massive fines, if not jail time.
Talk to clergy tax preparation professionals who have experience helping churches and their employees tackle the specialized tax issues that they face.
Many ministers are granted a housing allowance as one of their benefits; unfortunately, this can be challenging come tax time. Many pastors believe their housing allowance is completely tax-free, but that’s not the case. A tax professional with church-related experience can walk you through the do’s and don’ts to ensure that your tax returns are compliant.
Traditionally, when clergy members are granted an accountable plan, they’re reimbursed for any out of pocket expenses. However, the 2018 update to the tax rules has made this more complicated. Now, clergy members cannot claim unreimbursed expenses as a tax deduction. It’s important that churches take this into consideration as they create a pastor’s compensation plan.
Churches and payroll are often at odds; unfortunately, many churches aren’t well-versed in how to handle their payroll and they run the risk of trouble with the federal government. It can be challenging to negotiate social security and retirement contributions, not to mention health insurance and other benefits. Leaving it in the hands of paid professionals will not only save time, but it will ensure that your church stays on the right side of the law.
If you’re a clergy member who is not a W-2 employee of the church, your tax situation is automatically more complicated. You need to become familiar with form 4361, the form that exempts ministers and other members of religious orders from paying self-employment tax. Failure to fill out this form will result in a much heftier tax bill than anticipated.
Yes, pastors love their jobs, but it’s nice to have the option to retire when the time comes. Churches and members of the clergy can work together with an experienced accountant to ensure that money is set aside for the future. In addition to planning for eventual retirement, an Individual Retirement Account, or IRA, will relieve ministers’ tax burden. An advisor will help ministers take advantage of the tax deduction that’s permitted for contributions to a traditional IRA.
A tax professional with church experience can help clergy members plan for their inevitable tax bill. In fact, they can help you make estimated payments to ensure that you’re not caught short when tax season rolls around. It’s important to work with tax pros who have experience in tax preparation for pastors so you can be sure that you’re paying the right amount at the right time.
Tax law is complex, and when you add the additional tax issues related to churches, they can be overwhelming. Ascension CPA’s accurate, fast, and forward-thinking tax services help churches and members of the clergy with even the most complicated tax preparation.
When you rely on Ascension CPA’s tax professionals, tax season is stress-free. Whether you use a simple form 1040 or your tax situation is more convoluted, we’ve got the knowledge and experience to navigate tax returns with ease.
Ascension CPA’s founders, Jamie Ward and Cassidi Heltcel, both have firsthand experience with the complexities related to clergy taxes. Jamie himself was a minister, and he grew up in a pastor’s home, while Cassidi is married to a youth pastor and has done extensive research into church-related taxes. Both have done a great deal of research into church taxes, as they’ve been personally invested in the topic.
As a pastor, priest, minister, or other clergy member, your schedule is already jam-packed. You don’t have the time (or, likely, the inclination) to delve into the intricacies of the 2018 updated tax code.
Why not trust the experts? If you’re ready to turn your church-related tax return over to experienced professionals who have completed many tax returns for a variety of clergy members, let’s talk. Just fill out the form below to connect with us!