Five Key Tax Developments for Churches and Clergy in 2024

These tax five developments for churches and clergy included inflation adjustments and redefining highly compensated employees.

Church Law & Tax identified five key tax developments in 2023 that will affect church and clergy taxes for 2024

They are:

No change to the housing allowance

In March 2019, a federal appeals court rejected an atheist group’s challenge to the constitutionality of the housing allowance. The atheist group did not appeal this ruling, and there have been no further legal challenges. 

Revoking an exemption from Social Security

Congress has created three limited windows of time since 1977 to allow ministers who exempted themselves from self-employment taxes by filing a timely form 4361 with the IRS to revoke their exemption. The latest was in 1999. Congress did not pass any bills in 2023 that would have authorized ministers to revoke an exemption from Social Security. 

Save 25% when you order both a print and downloadable .pdf versions of our 2024 Church & Clergy Tax Guide. For 35 years, this easy-to-understand guide has helped church leaders and pastors navigate US tax laws.

Working after retirement in 2024

Many churches employ retirees who are receiving Social Security benefits. People younger than full retirement age may have their Social Security retirement benefits cut if they earn more than a specified amount. 

Full retirement age (the age at which you are entitled to full retirement benefits) for people born between 1943 and 1954 is 66 years. 

IRS to stop unannounced taxpayer visits

The IRS announced a major policy change in July 2023. The change ends most unannounced visits to taxpayers by revenue officers (ROs). This was done to reduce public confusion and enhance overall safety measures for taxpayers and employees.

ROs will no longer make unannounced or unscheduled field visits. Instead, they will send an appointment letter to schedule an initial or follow-up meeting with the taxpayer. 

IRS addresses inurement, intermediate sanctions, and the definition of a church (PLR 202317022)

A private letter ruling (PLR) issued by the IRS in 2023 to a tax-exempt entity claiming to be a church while providing behavioral health services addresses three important topics:

  • Inurement
  • Excess benefit transactions
  • What is a church?

Upgrade to an Advantage membership today to unlock all ten key tax developments with expanded information for each, along with an interview with Church Law & Tax Senior Editor and Co-Found Rich Hammar. In it, he covers the most common tax mistakes he sees pastors and churches make.

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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