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Minister’s Housing Allowance
There are tax perks to filing a tax return as an ordained minister. But some of the things you’ve heard in the pool of public opinion are false, while others have a hint of truth. For example, pastors and ministers do indeed pay income taxes. Churches, on the other hand, do not but that’s a different article for a different newsletter. If you are serving members of the clergy, it is important to understand these perks. One that I see messed up the most is the housing allowance. The IRS allows ordained ministers to exclude their housing allowance from taxable income. That is if they meet certain other criteria. The complete amount the church has deemed as a housing allowance is not always the amount that the IRS allows. Even with that, the excludable amount is only from income taxes, not all tax. Ministers also have special rules and a potential exemption when it comes to social security and Medicare taxes. This is where I see many well-meaning taxpayers and even tax professionals messing up. But that will not be you or your client. We are going to look at what the minister’s housing allowance is according to the IRS. Then we will look at who qualifies for it, and how to calculate it.
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CURRENT EDITION
How to Advise on the EV Tax Credit
At one time, a federal tax credit toward the cost of an electric car seemed like a permanent idea to help fight pollution and climate change. Now, a political shift in the U.S. endangers the notion and, more to the point, makes advising clients tougher in a tighter timeframe. How and when can those clients interested in an electric car and the credit still secure a tax break?
Leaving the United States, Part II: Renouncing Your Citizenship
In Part I of this 3-part series, we discussed the tax ramifications of living abroad, becoming an expat. In Part II, we go to the extreme by leaving America and renouncing our citizenship. And as you would guess, there are tax consequences to such an action. Before we step into renouncing our U.S. citizenship, we need to address how we can lose our citizenship.
Is Student Loan Forgiveness Taxable? It Depends…
Is student loan forgiveness taxable? Yes. No. Maybe. Sometimes. It primarily depends on the student loan forgiveness program. But like everything else with student loans, there are a number of other factors at play. Why make it easy when you can thoroughly confuse taxpayers, federal student loan servicers and financial planners for years to come? Keep reading to learn when student loan forgiveness might be tax-free and how to prepare your clients for taxable loan forgiveness.
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