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Showing posts from October, 2014

Can You Claim a Housing Allowance for Two Homes?

Question:

A minister recently accepted a call to a new ministry where he and his family are staying in the church parsonage. 

Meanwhile, the minister's home in the previous location is unsold. The minister is responsible for payments, taxes, and so forth, on the unsold home in the previous location. 

Can the minister claim a housing allowance on the unsold home? 

Answer:

The Ministers Audit Techniques Guide states that "A minister can receive a parsonage allowance for only one home." Many ministers own two homes due to the fact that the minister has accepted a position in a different community and has yet to sell his previous home (similar to the question above). 

Not only may a minister receive a housing allowance for only one home, but that home must be the minister's principal residence. A key term to understand here is the phrase "principal residence," which can be defined as the home where an individual is currently residing.  

So, in the situation above, th…

Health Insurance Marketplace - Exempt Based upon Membership in Health Care Sharing Ministry

Question:

According to HealthCare.gov, some individuals who don't have a qualified health insurance plan may be exempt from making the individual shared responsibility payment. I was reading the list of exemptions, and one of them stated an exemption for a member of a recognized health care sharing ministry.

What is a recognized health care sharing ministry? And what do I have to do in order to qualify for the exemption?

Answer:

A few days ago, we gave an overview of all the exemptions from the fee for not having health coverage. One of the exemptions we mentioned was based upon being a member of a recognized health care sharing ministry.

According to HealthCare.gov, a health care sharing ministry is "an organization whose members share a common set of ethical and religious beliefs and share medical expenses among themselves in accordance with these beliefs." The most common health care sharing ministries are Samaritan Ministries and Christian Healthcare Ministries.

H.R. 35…

Health Insurance Marketplace - Exempt Based Upon Hardship

Question:

According to HealthCare.gov, some individuals who don't have a qualified health insurance plan may be exempt from making the individual shared responsibility payment. I was reading the list of exemptions from the penalty, and I noticed one of them was called a hardship exemption.

What is meant by hardship? And what do I have to do in order to qualify for the exemption?

Answer:

Yesterday, we gave an overview of all the exemptions from the fee for not having health care coverage. One of the exemptions we mentioned was based on hardship.

Below are just a few of the circumstances that may qualify you for a hardship exemption. If you would like to know all14 circumstances of hardship that might qualify an individual to be exempt from the fee, you can read the list at HealthCare.gov.
You received a shut-off notice from a utility companyYou filed for bankruptcy in the last 6 monthsYou experienced unexpected increases in necessary expenses due to caring for an ill, disabled, or ag…

MinistryCPA Special Topic: Exemption Overview for the Health Insurance Marketplace

The "shared responsibility payment" started in 2014, which means that every person needs to have health insurance or make a payment (a nice way of saying a fee) on his or her federal income tax return. However, HealthCare.gov lists some exemptions that may allow individuals to avoid making this payment. Below, we have broken down the various exemptions while describing the different ways to apply for them.

Several of the exemptions can be claimed in one of two ways: (1) either when you file your federal tax return for the year or (2) when you apply for the exemption early through an application form. The following exemptions can be claimed by either of the two options previously described:
Exemptions based on coverage being unaffordableExemptions for membership in a health care sharing ministryExemptions for membership in a federally-recognized tribeExemptions for being incarceratedThe following three exemptions can only be claimed in advance through an application form and n…

Age Limits for IRA Contributions

Question:

Up until what age can I contribute to my Traditional IRA or Roth IRA?

Answer:

As long as all other requirements are met, a person can contribute to his or her Traditional IRA until that person reaches the age of 70.5 years.

Roth IRAs are different in that contributions can be made regardless of age; there is no "age limit." 

Although a lengthy document, IRS Publication 590 is a great resource concerning Individual Retirement Arrangements (IRAs).

Milestone - 200,000 Page Views

Earlier today, we reached 200,000 total page views on this blog! 

In late 2007, Dr. Corey Pfaffe, CPA, began this blog with the purpose of answering financial and tax questions asked by ministers and others serving in Christian ministries. It took us until March 14, 2013 to get 100,000 total page views. Now, only nineteen months after that first milestone, we have reached 200,000 page views. 

Thank you to everyone who has used this blog and has helped us reach this milestone. We hope that MinistryCPA has been of service to you and that our posts continue to help guide you in ministerial and ministry tax issues. We look forward to serving you in the future and reaching our next milestone!

Corey Pfaffe - CPA, Principal Tara Watterson - CPA, Senior Accountant Laurie Pfaffe - Office Administrator Kyle Kutz - Accounting Associate

Cautions for a Church Serving as a Missions Agency

Question:

Our church is thinking about acting as a missions agency by directly supporting some missionaries. Do you see any concerns with doing this?

Answer:

In the past, we have provided blog posts concerning how churches have chosen to serve as missions agencies. Recently, however, we have deepened our research and discussion concerning this complex topic. Our research and experience has provided some additional cautions about a church taking on the responsibilities of a missions agency. 

Regulations for missionaries continue to become more complex. Unless a church is willing and able to thoroughly research and act in accordance with these regulations, we strongly discourage churches from acting as missions agencies. We fear that either the church or the missionary will not have the expertise to comply with the law. 

Recently, the following topics have added to that complexity:
Affordable Care ActForeign Bank Account Reports (FBARS)Payments to foreign nationalsRetirement plansEmployee vs.…

Top Ten Q&A Update

We have recently updated our Top Ten Questions that Ministers, Missionaries, and Church Treasurers Ask Tax Preparers

Based on our experience, the Top Ten Questions are frequent questions asked by ministers, missionaries, church treasurers, and others serving in ministry positions as licensed or ordained ministers. Our answers are not intended to be exhaustive. Accordingly, you should consult your own tax professional for assistance in applying our information to your specific situation. 

The "Top Ten Q&A" has been our most hit web page since 2010. Providing a helpful resource to many who are involved in ministry, it averages close to 1,000 page views every two weeks. 

If you prefer to download a PDF of our Top Ten Questions, click here


Cell Phone Reimbursement by Church

Question:
One of our pastors recently upgraded his iPhone and submitted for reimbursement through a professional account. Is it proper for the church to refund him fully as a non-taxable reimbursement? 
Answer:
The italicized excerpt below is taken from IRS Publication 15-B. We have added some of our own comments, which are in parenthesis and underlined. 
The value of an employer-provided cell phone, provided primarily for noncompensatory business reasons, is excludable from an employee's income as a working condition fringe benefit. Personal use of an employer-provided cell phone, provided primarily for noncompensatory business reasons, is excludable from an employee's income as a de minimis (non-taxable) fringe benefit.
Noncompensatory business purposes. You provide a cell phone primarily for noncompensatory business purposes (the cell phone should not be a disguised way to give the pastor more compensation) if there are substantial business reasons for providing the cell phone. …