Buy this book every year at tax time!

The Zondervan Minister’s Tax and Financial Guide
is a “must have” for all ministers who prepare their own taxes. Even for those who don’t, this book tells you what to expect, what to keep track of, and how to structure or restructure your compensation package to be sure you are getting the greatest tax savings.

Written by Dan Busby, CPA, J. Michael Martin, JD, and John Van Drunen, JD, CPA, this book covers the tax return, insurance, social security, housing, retirement, reimbursement plans, self-employment, salary, compensation plan structuring, and contains a bunch of sample forms.

This book also contains the “10 Biggest Tax Mistakes Made by Ministers,” including #3: “Failing to have at least a modest housing allowance designated when living in a church-provided parsonage.”

Several of the strategies in this book can save the pastor $1000s per year on taxes and cost the church $0 extra to implement!

I especially like the integrity points at the end of each chapter, helping pastors to think through the moral implications of what they are doing with taxes, social security, ordination, etc. and avoid muddy grey areas or illegalities.

You can’t beat the price and the up-to-date information. Buy the new version every year to stay on top of the different changes in the tax code!

(But you really might want to pick up this year’s copy just so you can start planning for next year.)

Is your housing allowance getting you the biggest tax benefit?

housemoneyMinister’s Housing Allowance, Parsonage Allowance, Parsonage Exclusion… different churches and denominations call this different things. But it’s all the same.

The US Congress has reiterated that they want properly credentialed pastors, rabbis, imams, and other clergy to be able to exclude the entire cost of their housing from taxes every year. This includes mortgage payments, rent, HOA, insurance, utilities, furniture, landscaping, repairs, and improvements. But not maid service. Generally, anything that belongs in your house that you can’t easily take with you when you’re walking out the door can be included. This means you can count a desktop computer in your housing allowance but not your laptop.

The housing allowance is a HUGE TAX BENEFIT for pastors! What you include in your housing allowance is an EXCLUSION from income, not a deduction from taxes. This means that your housing allowance will reduce your taxable income dollar for dollar.

Many pastors or churches have been told (and thus believe) that they can only count half of the pastor’s income or some magic number like $40,000 as parsonage allowance. But that’s not the case.

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