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IRS Commits to Auditing Churches
But details about procedures are kept secret.
IRS Commits to Auditing Churches

Editor's Note: In story released on July 25, CT's Gleanings reported, "The Internal Revenue Service (IRS) has agreed to investigate the political activity of churches after reaching a settlement with an atheist legal group." According to the report, the Freedom ...

Q&A: Tax Deductible Mission Trips
Can individuals who go on mission trips deduct their expenses?
Q&A: Tax Deductible Mission Trips

Q: For my church's short-term mission trips, participants give the church money for a special fund that's used to pay their trip expenses (airfare, lodging, and so on). Some participants believe the money they spend for a trip is tax deductible and should be listed on ...

Q&A: Housing Allowance
Can a new hire receive a housing allowance for the rest of the year?

Q: We're in the process of hiring a new youth pastor. Can we implement a housing allowance for the rest of 2014?

A: Presuming your new hire meets the criteria to qualify for a housing allowance, the church can set an allowance effective on their first day on the job (presuming ...

Q&A: Is a Pastor's Holy Land Trip Tax Deductible?
Specific rules dictate the tax treatment for pastors and donors.
Q&A: Is a Pastor's Holy Land Trip Tax Deductible?

Update: This post was updated on 5/22/14 to clarify the tax deductibility of contributions made by donors toward a trip.

Q: Our church's CPA says that because a Holy Land trip will serve in the continuing education of our pastor, it would be a tax deductible expense, and ...

Q&A: Rules Covering Opting Out on Social Security
A pastor asks if it's too late for him to opt out.

Q: I have been a pastor for 15 years. In the beginning of my pastorate, I received some confusing information from the IRS about opting out of social security, so I never did.

I recently became ordained in the denomination that I have always served in. I also now understand the ...

Q&A: Personal Vehicles for Church Business
What's the right amount for mileage reimbursement?

Q: For church employees using their personal vehicles for church business, do they use the 56 cents or the 14 cents for mileage reimbursement in 2014?

A: I directly address mileage reimbursements in Chapter 7 of my annual Church & Clergy Tax Guide.

Every year, the IRS provides ...

Should Ministers Prepare Their Own Tax Returns?
It's not as hard as you might think.

Ministers can prepare their own tax returns. While ministers' taxes present several unique rules, these rules are not complex. Unfortunately, many people confuse uniqueness with complexity. With a little effort most ministers should be able to comprehend these rules sufficiently ...

Watch Out for Tax Scams
The IRS says don't fall for these 12 schemes to steal your money.

Each year, the IRS releases its "Dirty Dozen" list of top tax scams. Here are the 12 scams you and your church should watch out for this tax season:

  • Identity thefts
  • Pervasive telephone scams
  • Phishing
  • False promises of "free money" from inflated refunds
  • Return preparer fraud
  • Hiding income offshore
Why Pastors Must Pay Federal Income Taxes
Ministers aren't exempt, so why do some still try to avoid them?
Why Pastors Must Pay Federal Income Taxes
Image: Bethany Legg / Unsplash

Ministers are not exempt from paying federal income taxes. Since 1943 (Murdock v. Pennsylvania, 319 U.S. 105), the United States Supreme Court has ruled that the First Amendment guaranty of religious freedom is not violated by subjecting ministers to the federal income tax. ...

Tips on Selecting a Tax Preparer
Choose a person with experience preparing ministers' tax returns.

Let's assume you've decided to have your tax return prepared by a professional. The next step is to find someone who is experienced and competent in the preparation of ministers' tax returns. Here are some tips to help you find such a person:

  • If possible, stick with a CPA or tax attorney. These professionals have completed a rigorous educational program, passed a difficult qualifying examination, and are subject to a comprehensive body of professional ethics.
How to Prepare W-2s for Church Employees, Including Ministers
Last-minute help for completing these important forms.
How to Prepare W-2s for Church Employees, Including Ministers
Image: freddie marriage / Unsplash

Churches need to report each employee's taxable income and withheld income taxes as well as Social Security and Medicare taxes on Form W-2, and furnish copies B, C, and two of the 2013 Form W-2 to each employee by January 31, 2014. Copy A should be submitted to the Social ...

Justice Department Appeals Wisconsin Clergy Housing Allowance Ruling
Process with Seventh Circuit may take up to a year to resolve.

Richard Hammar, senior editor of Church Law & Tax Report and ChurchLawAndTax.com, reports the Justice Department filed a notice of appeal this afternoon in the Wisconsin clergy housing allowance case.

In late November, a federal district judge ruled the housing allowance provided ...

10 Common Payroll Tax Errors
These pitfalls often trip up churches.

In the video below, Richard Hammar reviews what he considers the ten most common payroll tax errors made by churches. Hammar, along with Christianity Today, publishes a comprehensive tax review in his annual book the Church & Clergy Tax Guide, available at ChurchLawAndTaxStore.com. ...

Churches: Important January 31 Deadline Looms
Why leaders must remember this important tax-related task.

Churches and businesses must issue their employees' 2013 W-2s by January 31. This applies to clergy who report themselves as employees, but not the self-employed. This is a critical date for all organizations.

When churches don't issue W-2s in a timely fashion, it strains relationships ...

Are Churches Legally Required to Issue Statements for Every Contribution?
Reader: What about a one-time donation of only $10?
Are Churches Legally Required to Issue Statements for Every Contribution?
Image: Lukas Blazek / Unsplash

We recently fielded this question from a church administrator in Virginia:

Is there a minimum gift amount for which a contribution statement must be issued? For instance, if someone visited the church one Sunday and dropped a $10 check in the offering plate, is the church obligated ...
Q&A: Hosting a Music Group at Church

Q: I'm a pastor of a local church and have some questions about groups and individuals that come to the church to do musical performances. I'd like to know what our requirements are as a church regarding the legal and tax requirements. For example:

  • Is it okay to collect an offering to offset expenses associated with the performance (travel, meals, and so on)?
Accountable Reimbursements Prove Best Way to Handle Ministry Expenses
Your employees will thank you.

The best way for ministers to handle their ministry-related business expenses is to have their employing church adopt an accountable expense reimbursement arrangement. An accountable arrangement is one that meets the following four requirements: (1) only business expenses are ...

Obamacare: What's Next for Churches
Is your church ready?

The recent temporary fix on Capitol Hill helped the government avoid defaulting on its debt obligations. Republicans and Democrats now continue discussions about a fiscal budget, and with funding still in place for the Affordable Care Act, its implementation remains on track. ...

Five Takeaways from the November 2013 Housing Allowance Ruling
Richard Hammar offers key points regarding Wisconsin judge's ruling.

UPDATE (12/2/13): Below are five immediate takeaways from Richard Hammar on the November 22, 2013, ruling on clergy housing allowances by a federal judge in Wisconsin. Rich goes deeper on these five, plus five more, in the January/February issue of Church Law & Tax Report. ...

Q&A: Is Donated Parking Space Tax Deductible?

Q: A church member allows us to park our buses at his business. We used to pay $200 a month for this service. In the past we have given this church member a letter indicating a donation of $2,400 per year, which he could use as a charitable contribution. Our question is, "What ...



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Essential Guide to Liabilities and Duties for Church Boards

Essential Guide to Liabilities and Duties for Church Boards Subscriber access only

Be aware of ways you can expose yourself to personal legal liability.
Receipts for Donors

Receipts for Donors  Subscriber access only

16 letters and forms for providing receipts to donors for different donations.