In December of 2017, Congress passed the largest tax law changes in 30 years. These changes have a significant impact on how income is allocated between wages and clergy housing allowance. It is crucial to assess these changes now in order to maximize your refund next April. My name is Brett Willoughby, CPA, and I am a tax preparer. At tax time, we prepare tax returns for over 300 clergy members every year. In the last 25 years, we have completed over 10,000 clergy tax returns. We thoroughly understand how the tax law affects clergy members, and we love working with them. One crucial aspect we address is the allocation between wages and clergy housing allowance. This allocation affects your refundable credit, which increases as your income rises. These refundable credits can be used to offset your taxes. For instance, if you earn $32,000 with one child and no clergy housing allowance, your refund would be $6,700. However, if your income increases to $38,000 and you have two kids, the refund goes up to $6,900. Determining the exact numbers for your specific situation is essential, and this is something we do with our clients every year. If you would like us to analyze your allocation and tax returns, please give our office a call at Tax 9-1-1. We specialize in preparing tax returns for clergy pastors, and if you mention that you saw this video, we will provide you with a 30 percent discount for religious workers. Thank you very much.
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2019 clergy tax guide Form: What You Should Know
For income tax purposes, facts and circumstances determine whether you're considered an employed clergy member. Topic No. 418 Religious Education Credits The tax laws provide that churches and other property devoted to religious worship and teaching may not be subject to a tax upon income from such worship and teaching. It is the church's policy to pay for such education expenses and other religious activities. Topic No. 418 Religious Education Credits for Church-Related Expenses: (a) The church pays the expenses directly. (b) The church may elect to include in income in respect of a church-related expense incurred by an individual the income derived from the income of such individual for the taxable year from an amount not yet deducted as income of that individual, or for such taxable year from a tax benefit that was not taxable at the time the expense was incurred by the church, or in respect of a rental unit, a property that the church owns, where the rental unit, including the rental unit's interest in a rental unit that is owned by another entity and is owned by the individual for an amount that is not less than the average annual rent for the term of the rental unit, and the expense is paid at a time when the church can reasonably be expected to have the income derived from the individual's salary, or The church may elect to include in income in respect of a church-related expense incurred by a person under the age of 18 the income derived from the individual for that year from amounts not yet deducted by that person as income of that individual for the taxable year from any other taxable purpose. Topic No. 418 Religious Education Credits for Church-Related Expenses: (a) The church pays the expenses directly. (b) The church elects to include in income in respect of a church-related expense incurred by a person under the age of 18 the income derived from the income of that person for that year from an amount not yet deducted by that person as income of that individual for the taxable year from any other taxable purpose. The church may make this election only with respect to the religious education expenses and other church-related expenses paid.
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Video instructions and help with filling out and completing 2024 clergy tax guide
