June Tax Reminders for Pastors

2013 is flying by, and deadlines can sneak up on you. Be ready to prepare for these two dates in June:

June 15

Since most ministers are considered self-employed (for FICA and Medicare purposes), they have to file and pay estimated taxes quarterly. If you ask your church to withhold these taxes through withholding, then this doesn’t apply to you. However, if you pay all of your taxes independently, then make a payment by June 15.

Also, although now common,  quarterly unrelated business income tax (UBIT) is due on June 15^th if you expect the total tax for the year to be $500 or more. You receive unrelated business income from sources like rent from certain types of property and income from a regularly carried on trade or business operation.

June 30

Mid-year is a perfect time to review policies to make sure that you’re following what you need to do. If there are discrepancies, it’s easier to make
corrections now before getting too far into the year. For example, look at your expense reimbursement policy and make sure that it meets the IRS criteria for an accountable plan. Lack of a qualified reimbursement policy can result in having to 1099 employees for reimbursements that would
otherwise be nontaxable. Another policy to address and confirm is your minister’s housing allowance. Is the current amount still meeting the minister’s needs? If not, it can be adjusted during the year.

I’ve written a lot about tax reporting rules for churches. Scan the tags at the right of this post for your specific areas of interest.

Tags: federal tax law, Form 1099, Housing Allowance Exclusion, IRS, parsonage allowance, reimbursement policy, unrelated business income tax