The "The Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010," passed by Congress and signed by President Obama in mid-December, triggered a domino-like effect of changes for tax-filers–so much so that even the Internal Revenue Service delayed its efforts to process returns (it finally began doing so on Monday).
For pastors, the tax-filing process already is a cumbersome one. As Richard Hammar notes in the upcoming edition of Church Law & Tax Report, there are at least 20 common tax-filing mistakes that clergy make each year, either because they filed their own returns and didn't understand how various laws applied or because they used a tax professional who didn't understand the unique complexities that apply to clergy. Among the mistakes frequently made:
Error No. 1: Reporting Social Security taxes as an employee.
Error No. 4: Failure to report the personal use of a church-provided car as taxable income.
Error No. 10: Ineligible ministers exempt themselves from Social Security.
With December's "Tax Relief Act," the possibility for confusion only grows. Among other things, numerous tax breaks that were set to expire instead received extensions.
But there's help–and hope–for pastors and the tax professionals who serve them.
Aside from Rich's feature article in the next Church Law & Tax Report, he also provides a second article–complete with updates and analysis–on the Act.
And at 12 p.m. CST next Wednesday (February 23), Rich will present a live, one-hour webinar with the Evangelical Council for Financial Accountability's Dan Busby on "Clergy Tax Issues for 2010 Returns." Rich and Dan will cover these key changes and take participant questions, too.
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