- Tax Due Dates:
about a filing deadline or other date? Use our calendar to find
- Ask a Question: If you can't find the
answer to your question in our FAQ, you can ask a question through our
website for free by clicking this link.
do I ...?
do I ...?
is the IRS rate for ...?
Clifford & Associates, LLC ...?
much do you charge ...?
Do I have to file a tax return?
A.General rule: A tax return must be
filed if your gross income is greater than or equal to the sum of the
standard deduction and the personal exemption amount for your filing status
(this amount changes from year to year and can be found on the IRS website).
If you are self-employed (this includes clergy) and your net business
earnings are greater than or equal to $400 or owe any self-employment tax,
you must file.
If you are a dependent, you may or may not have to file, depending on your
gross income (the filing requirements change from year to year and can be
found on the IRS website).
You may still want to file a tax return in order to get a refund of any tax
How much do you charge to prepare a tax return?
A. Our fees are based on the forms required and the complexity of the
return. Most of our fees range between $150 and $250, with an average of
$200. Clients with investments, rental property, partnerships, tuition
payments, or home-based businesses will incur higher fees. Please use our organizer to
help you know what information to bring or send. We also look for ways to
simplify your tax return and keep fees to a minimum.
Does Clifford & Associates, LLC audit or review a church?
A. No. If an audit or review is legally required, you must consult
with a CPA. We only provide consulting services. We can provide support
and training in a variety of areas, including internal controls, bookkeeping,
reporting, QuickBooks®/Quicken®, and payroll. Fees vary depending on the
scope, the time needed, and the magnitude of any problems encountered.
Contact us for a free quote.
Does Clifford & Associates, LLC accept new clients?
A. Yes. If you know of friends or family who could benefit from
our services, please refer them to us. We gladly accept new clients.
How much do you charge to provide payroll services?
A. Payroll service set-up costs depend on the number of employees and
the specific services requested. Bookkeeping, consultation, training,
compensation planning, and related services are all billed separately and
customized according to each client's needs.
What is my filing status?
A. There are five filing statuses. The following are the general
requirements for each (there are exceptions):
Unmarried or fail to meet requirements for any other
Married as of the last day of the tax year OR
Spouse died during the tax year
- Married filing
Married but not filing with spouse and not abandoned
Generally must be unmarried or separated for the last 6
months of the year and not entitled to file as a surviving spouse; must also
have provided more than half the cost of maintaining as your home a household
that was the main home for a qualifying person. A qualifying person includes
- A qualifying child
who is single
- A qualifying child
who is married AND you can claim as a dependent
- A qualifying
relative who you can claim as a dependent (but not because of a
Contact your tax professional for details.
Can file as this status for the two tax years following
the death of a spouse if all four of the following are met:
- You were entitled to file a joint return with your
spouse for the year he or she died. It does not matter whether you
actually filed a joint return,
- You did not remarry in the two years following the
year your spouse died,
- You have a child or stepchild (not a foster child)
for whom you can claim a dependency exemption, and
- You paid more than half the cost of maintaining a
household that was the main home for you and that child, for the whole
How do I get tax forms?
A. Tax forms can be acquired at most local libraries and online in PDF
format from the IRS website.
How do I get another copy of my tax return? I can't find my tax
information. What do I do?
A. You have several options if you have lost your copy of your return.
Your first option is to contact your tax preparer and request another copy of
your return. Your preparer may charge a fee. Your second option is to submit
Form 4506 ("Request for Copy of Tax Return") to the IRS. The IRS
requires a $57 processing fee for each copy requested. Your third option is
to request an account or tax return transcript from the IRS. Transcripts are
free and, in most cases, are acceptable substitutes for an exact copy of the
return. To request a transcript, you can call the IRS at 800-829-1040 or mail
Form 4506-T ("Request for Transcript of Tax Return").
If you can't find your tax reporting statements (W-2, 1099, etc.) and have
not yet filed your return, you can either contact the issuer and request
another copy or you can call the IRS or file IRS Form 4506-T and request a
wage and income transcript.
How do I prepare for my tax appointment?
A. Please go to our Downloads
section and use our engagement letter and client tax organizer to help you
with this process. Bring all W-2's, 1099's, 1098's, investment statements,
income & expense reports for home-based businesses, records of tax
payments made (estimated payments), your previous tax year statement, and
updated personal information.
When do I throw away my tax records? How long should I keep tax returns
A. It depends. Generally, the IRS has three years from the due date of
your tax return to challenge, audit or change the total tax owed. For the
IRS' record retention recommendations, refer to IRS
Publication 552 and IRS Publication
583. Generally, all tax related records should be kept for at least four
years after the filing deadline. Investment records should be retained until
the investment is sold plus four years. Rental property records should be
kept for four years after the property is sold. However, if you did not file
a tax return there is no statute of limitations! Also, there may be non-tax
reasons to hold on to records for a longer period of time than the general
record retention rules recommend.
We have worked on some audits that required tax records going back over
twelve years due to some obscure regulations and circumstances. Corporations,
partnerships, trusts and exempt organizations should keep all records at
least seven years. Refer to When do I throw
away church records? How long should a church keep records? for more details on church record retention guidelines.
When do I file my tax return? What is the due date?
A. Your tax return and payment of any tax liability are due on April
15. If April 15 falls on a weekend or holiday, the return and payment will be
due on the next business day. You can file to extend the due date of your
return until October 15. However, even if you file for an extension, any tax
you owe is still due April 15. Any unpaid tax will accrue interest and
penalties if not paid by this date.
When do I file my tax return if I filed for an extension?
A. If you file for an extension the new deadline for your tax return
will automatically be October 15. You cannot get an extension of the due date
beyond October 15. Even if you file for an extension, your tax payment is
still due April 15. It will accrue interest and penalties if not paid by this
What is the IRS approved mileage rate for business mileage?
IRS Annual Mileage
What is the IRS approved mileage rate for medical/moving mileage?
IRS Annual Mileage Reimbursement Rates:
What is the IRS approved mileage rate for charitable mileage?
IRS Annual Mileage Reimbursement Rates:
Should I issue W-2's for all employees, or just the main ones?
A. W-2's are required for all employees. Independent contractors
should receive Form 1099's. The person in charge of payroll should get
Publication 15, Pub. 15-A, or Pub. 5-B annually. Refer to Handout:
"Independent Contractor or Employee?"
How much do you charge to complete Form
W-2's and/or other payroll forms? Can you create W-2's for us?
A. Our fees vary with the number and complexity of forms
required. We will need detailed payroll information--number of
employees; job titles; amounts withheld for federal, state, local, FICA, and
Medicare taxes; whether 941's, Workman's Compensation, state, and withholding
reports have been filed; clergy withholding, housing allowance/parsonage, car
mileage reimbursement plan; etc. Fees depend on which forms need to be filed
as well as the quality and accuracy of the payroll reports. Information
submitted after January 24 may entail late charges. Please call our
office for a free quote.
Do I have to pay taxes on an inheritance?
A. It depends.
If any federal estate tax estate tax is due, the estate is
responsible. You do not have to pay tax on an inheritance.
Each state has its own separate limits. You may have to pay state
inheritance tax. Check with your state to see if this tax applies to you.
If you inherit an IRA or other retirement fund, you may have to pay income
tax on any increase in the value of the account(s). For instance, if your
ancestor invested $10,000 in an IRA many years ago and the account is worth
$100,000 when you inherit it, you would pay income tax on the $90,000
increase in the account.
If you inherit stocks or mutual funds, you may pay income tax when you
sell such items. Your cost basis in the shares is usually the fair value of
the shares on the date of death of the person from whom you inherited the shares.
For a detailed analysis of your particular situation, please contact our
Is there a ceiling or limit on how much a church can designate as
A. No! Set it generously above the expected expenses for the next
year. See Nuts & Bolts of Clergy Tax (available in our Books Section) for more information.
Should the church pay for housing or just reimburse the pastor?
A. Either is acceptable, but it is unusual for any employer to pay
such expenses directly. Common practice is to pay the housing allowance with
each paycheck in equal installments.
Should the church board approve my housing allowance amount?
A. Whoever has the power to set salary (the elders, the congregation,
the denomination, etc.) must also set the housing allowance. The
determination should be documented in the church minutes.
Does the amount of housing allowance need to be announced verbally or in
written form at a board meeting?
A. Written form.
Does the amount of housing allowance have to be in the minutes of the
Is housing allowance considered income?
A. Housing may or may not be considered income, depending on the type
of tax being considered. Housing allowance spent on qualifying housing expenses
is generally not income subject to income tax. However, housing allowance
earned as an employee is earned income subject to Social Security and
Medicare taxes (self-employment taxes). Housing allowance received in
retirement is not earned income for Social Security and Medicare tax
Is the clergy housing & furnishing allowance always tax-free?
A. NO! Housing allowances and the fair rental value of parsonages are
subject to Social Security tax of 15.3%. Also, any amount not spent on housing
is fully taxable.
Is a minister considered self-employed or an employee?
A. A minister is an employee for federal income tax purposes and
self-employed for Social Security tax purposes. (For more information, see Nuts
& Bolts of Clergy Tax available in our Books
How do I prepare a Form W-2 for a minister?
A. A minister is an employee for federal income tax purposes and
self-employed for Social Security tax purposes. Box 1 of the W-2 should not
include clergy housing allowance. The amount of housing allowance should
appear in box 14. For more help, try our sample clergy W-2 form,
or refer to our sample Form W-2, included in the Nuts & Bolts of
Clergy Tax book in our Books Section.)
What is housing allowance? What are deductible housing expenses?
A. Section 107 of the Internal Revenue Code provides that clergy may
receive a housing/parsonage allowance. Housing allowance may come in the form
of a church-provided parsonage and utilities, a cash allowance, or a
combination of both. The portion of the allowance that is spent for housing
expenses is not subject to federal income tax. However, the entire allowance
is subject to Self-Employment tax.
You must have designated housing allowance in order to deduct housing
expenses. All expenses to furnish and maintain the home of a minister are
housing expenses. Maid and lawn service, food, and personal care products are
not housing expenses. A minister does not pay federal income tax on the
portion of pay designated as housing allowance if it is spent on qualified
housing expenses. A minister still pays self-employment tax on the full
amount of housing allowance. Any unspent allowance will be subject to federal
income tax. The following list gives some items that are housing expenses:
- Mortgage payment (principal & interest) or rent
- Real estate taxes on the primary residence
- House/property insurance on the primary residence
Maintenance, repairs, & improvements
Major purchases (furniture, appliances, home
computers, VCR/DVD player, trash cans, lawn tractors, etc.)
Minor purchases (light bulbs, cleaning supplies for
the home, Christmas decorations)
Outdoor expenses (mower, yard bags, garden tools,
etc., but not hired labor)
Can I receive housing allowance in retirement? Is housing allowance
taxable in retirement?
- Gas/fuel oil/other
- Local phone only (no
long distance calls!), including special computer phone line rental
- Cable TV, cable
modems, internet access, DSL lines, & everything related
- Satellite dishes
& Direct TV
- Internet service
A. Yes, you may receive housing allowance in retirement. Housing
provided by the church to retired pastors, as long as they are no longer
performing any services for the church, is not subject to income tax or
self-employment tax, per Internal Revenue Code section 1402(a)(8). The
portion of distributions from clergy 403(b) plans and equivalent church
pension plans used for qualifying housing expenses may be nontaxable. See
Housing Allowance in Retirement.
I have bought/sold my house this year. How do I handle buying/selling my
house for tax purposes? What do I need to do?
A. Bring a copy of the HUD-1 or similar closing papers to your tax
appointment. There may or may not be tax repercussions. If the profit on the
sale was below $250.000 ($500,000 if married and filing a joint return) and
there was no home business or depreciation involved, there is generally
nothing to report.
Should I pay city income tax? Must I file a city tax return?
A.Those who live
inside a city with a tax must file. Those who work within a city’s
limits must pay. If your employer does not withhold the correct amount,
you must file and pay the difference. If there is no withholding, most
cities want estimated payments. For most, wages, business profits and
rental income are taxable. Clergy housing is exempt. Ohio’s city taxes
are among the most complicated of any state.
What is the IRS amount of the Child Tax Credit?
A.This is a refundable credit of $1,000 for
each qualifying child aged 17 and under. Taxpayers may receive less than the
full amount of the credit, depending on their tax situation.
How do I qualify for an education credit?
A. The American Opportunity credit is available for students in the
first four calendar years of post-secondary education in a degree or
certificate program attending at least half-time. The American Opportunity
credit is based on 100% of the first $2,000 of qualified tuition, fees, and
course materials expenses, plus 25% of the next $2,000 of expenses paid
during the year, for a maximum credit of $2,500. Generally, up to 40% of the
credit is refundable.
The Lifetime Learning credit is available to any taxpayer who paid qualfied tuition expenses during the year to an eligible
educational institution. The credit is based on 20% of up to $10,000 of
expenses for a maximum credit of $2,000. It is nonrefundable.
Often students will receive a Form 1098-T showing the amounts billed and/or
paid for education. If your Form 1098-T only shows amounts billed, not
amounts paid, be sure to obtain an account transcript showing the amounts
paid during the year. Only amounts actually paid may be claimed for the
How do I qualify for the energy credits?
A. The Energy Credit is still available for some taxpayers. Certain
insulation, windows, doors, water heaters, furnaces, and other improvements
are eligible for a tax credit. Ask your vendor if the item qualifies for the
credit. You must receive a certificate and save all your receipts for tax
time. There is a lifetime limit on the amount of credit you may claim. Check
with your tax preparer to see if you qualify.
What is a Required Minimum Distribution (RMD)? Should I take a
A. If you are over 70½ and have an IRA, 403B or 401K account, you must
make a withdrawal or "required minimum distribution" (RMD) from
your account every year. The IRS will assess penalties for failure to take
the RMD. Check with your financial planner for details.
I am over 70½ and have an IRA, 403B or 401K account. What is the
“Required Minimum Distribution (RMD)?
A. In most cases, your financial institution or investment advisor
will calculate the amount. Distributions must be made by December 31. Check
with your financial advisor for details.
Should I take funds out of my IRA or other retirement account?
A. It is possible to take funds out of your account, but you may incur
large costs. All withdrawals are subject to income tax. If you are under the
age of 59 ½, expect a 10% penalty on top of income taxes. If you are 70½ or
older, you may be required to take a distribution out of your account. Plan
on total federal taxes of 15-35% plus state income taxes. Check with your financial
advisor for details.
How do I check the status of my state tax refund?
A. Most states have an online tool available that will allow you to
check the status of your return. Visit our Tools page for our list
of links to state tax resources.
Clifford & Associates, LLC
S.D. Clifford Advisors, LLC
Harvest Pension Group, LLC
4150 Belden Village St. NW
Canton, OH 44718
Steven Clifford, CFP©, EA