Overview: Tax Developments of Note in 2021

Tax season is coming. Here’s how to get prepared.

Several tax developments in 2020 will affect tax reporting by ministers, church staff, and churches for the upcoming tax-filing season as well as reporting and records-keeping requirements in 2021 and beyond. Richard R. Hammar provides insights into the 71 key developments in his 2021 Church & Clergy Tax Guide, now available for pre-order.

Several of the top developments relate to the pandemic, such as the “Coronavirus Aid, Relief, and Economic Security (CARES) Act of 2020,” which provided $8.3 billion in emergency funding for federal agencies to respond to the COVID-19 outbreak. While many of the provisions in the original CARES Act have expired, those with relevance to churches and church staff in 2020 and future years include:

  • Rebates (“stimulus payments”)
  • Waiver of 10-percent penalty on early withdrawals from qualified retirement accounts
  • Personal loans from qualified retirement plans
  • Required minimum distributions
  • Charitable contributions enhancements in 2020
  • Payroll taxes

In addition, the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act) includes six provisions of relevance to churches and church staff, such as:

  • specifying those individuals who may be covered by pension plans maintained by church-controlled organizations, and
  • expanding “529 education” savings accounts to cover costs associated with registered apprenticeships, student loan repayments, and certain costs associated with elementary and secondary education.

Additional developments address charitable contribution deductions; FICA tax withholding for ministers; whether Congress will give ministers another opportunity to revoke an exemption from Social Security; IRS updates to group-exemption procedures; and more.

Get the full picture. See Richard Hammar’s comprehensive review in the exclusive Advantage Member article, 10 Recent Tax Developments Affecting Churches and Clergy in 2021, or purchase your copy of the 2021 Church & Clergy Tax Guide.

Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.

This content is designed to provide accurate and authoritative information in regard to the subject matter covered. It is sold with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. "From a Declaration of Principles jointly adopted by a Committee of the American Bar Association and a Committee of Publishers and Associations." Due to the nature of the U.S. legal system, laws and regulations constantly change. The editors encourage readers to carefully search the site for all content related to the topic of interest and consult qualified local counsel to verify the status of specific statutes, laws, regulations, and precedential court holdings.

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