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The Taxes Churches Have to Pay
Richard Hammar says expert guidance is needed to understand tax laws.
The Taxes Churches Have to Pay

In this audio interview with podcast host Tony Gill, Richard Hammar discusses misconceptions many people have about how tax law relates to churches. For further insights into the issues covered in this interview, see Hammar's annual Church & Clergy Tax Guide.

IRS May Look Into Activities of 99 Churches
Agency appears ready to monitor church political activity again.
IRS May Look Into Activities of 99 Churches

Details from a settled lawsuit in Wisconsin slowly continue to surface, giving a growing sense the Internal Revenue Service (IRS) is ready to resume monitoring political activities of churches, although questions still remain.

A letter sent in June by Mary Epps, the acting director ...

Q&A: Tax Deductible Mission Trips
Can individuals who go on mission trips deduct their expenses?
Q&A: Tax Deductible Mission Trips
Q&A: Housing Allowance
Can a new hire receive a housing allowance for the rest of the year?

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

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

Q&A: Hosting a Music Group at Church

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 ...

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. ...

How Does the Affordable Care Act Affect Churches?
Attorney Frank Sommerville walks churches through the next two years of changes.

Q: What are some provisions of the Affordable Care Act that take effect in 2013 and 2014 that churches should be aware of?

A: Well, the biggest provision that affects 2013 is going to be changing your cafeteria plan limit for medical expenses to $2,500. But the really big problem ...

Gifts of Money to Pastors
If money is collected and distributed by the employing church, it may be taxable income.
Gifts of Money to Pastors

Some church members give their pastor, or other church employee, a personal gift on special occasions such as a $20 bill enclosed with a birthday card. These personal gifts may be treated as nontaxable gifts by the pastor because they were not distributed by the employing church. ...

Neglecting to "Render Unto Caesar"
Failure to file income tax returns can get new ministers into hot water.

Ministers—especially new ones—often fail to file income tax returns. It's a common problem, because churches are not required to withhold either income taxes or Social Security taxes from the wages of ministers who are performing ministerial services. This occurrence ...

Churches: The IRS is Substantially Closed, But Your Obligations Remain

Editor's Note (10/17/2013): Congress passed a bill last night that ended the shutdown. President Obama signed the bill ahead of the default deadline that loomed at 11:59 p.m.

Due to the lapse in federal government appropriations (the so-called "government shutdown"), substantial ...



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Creating a Disaster Preparation and Response Plan

Creating a Disaster Preparation and Response Plan Member access only

Learn the steps you can take now so you are ready to respond if a crisis unfolds.
Charitable Contributions Bulletin Inserts

Charitable Contributions Bulletin Inserts Member access only

Help your members give more by answering their charitable giving and tax law questions.