Finance Friday: Clergy Tax Increases
My friend Bill O’Connell from Wisdom Over Wealth passed this along to me the other day, and I think it is something that pastors need to take notice of:
Clergy have a 2% tax increase in 2013
Ministers are reminded that Congress gave them a 2% tax increase for 2013, when they let the 2010 “payroll tax holiday” expire on December 31, 2012. For most clergy who pay Self-Employment tax on Salary and Housing/Parsonage Allowance this will likely produce an unexpected and unpleasant surprise next April. For a minister with a total package of $50,000, this will result in an additional tax of $1000.
Ministers should adjust their voluntary withholding or estimated payments accordingly. Taxpayers with other changes, like job changes, additional dependents, or new homes should seek out a qualified tax professional to obtain a forecast of their 2013 tax profile.
Several years ago I learned the hard way just how difficult taxes can be for pastors. A minor miscalculation, or a slight misunderstanding of how the housing allowance works, and you can end up owing a great deal of money to the IRS (trust me, that isn’t a whole lot of fun). This is why I highly recommend finding, and leaning heavily on, a tax professional that is familiar with the nuances of ministerial taxes. Bill has offered a free consultation with any Church Thought readers who have questions about this change, or income taxes in general. Click here to contact Bill.
Are YOU prepared for the tax increases?