Skip to content

Health Care Information on my W-2?

When you get your 2011 W-2, you might notice some new information on the form. Box 12 is where the church will report the cost of your group health insurance coverage. This amount is both the amount the church pays as well as the premiums paid via payroll deductions.

The amount, which will be designated by the code DD, is not taxable income. It’s informational only, designed to help IRS confirm taxpayers have coverage. Under the health care reform law, the Affordable Care Act, the data will help to enforce the eventual individual coverage if it survives a Supreme Court hearing as well as the so-called Cadillac tax on more expensive insurance plans.

However, if you don’t see anything in Box 12, don’t be concerned. The IRS ruled that reporting 2011 health care data is optional for employers.

Source – IRS

Clergy Financial Resources

Clergy Financial Resources is a national accounting and finance organization serving churches and clergy since 1980. They have an unparalleled tax expertise on the complex issues associated with clergy tax law, clergy taxes, clergy compensation and church payroll. Clergy Financial Resources is a valuable resource for clergy, churches and denominations.


Tax Documents Necessary to File

Statements are on the way from employers, banks, stockbrokers and other institutions and agencies that were involved in taxpayers’ financial lives last year. Each of these groups has, by law, until Jan. 31 to get their annual tax statements in the mail to you.

Many taxpayers now receive these documents electronically. So be sure to double-check your email, not just the curbside mailbox, for these statements.

Common income, deduction statements

Most taxpayers depend on the same basic data to file returns. If you work for the church or any other employer, the Internal Revenue Service expects you, and the agency, to get a statement detailing that income. The data are slightly different, depending on whether you get paid a salary or do contract work, but there’s a form for either case.

W-2 — This is the key form, and you need one from each church or employer you worked for during the past year. Your W-2 shows how much money you made, how much income tax was withheld, Social Security and Medicare taxes paid, and any benefit contributions — retirement plans, medical accounts and child care reimbursement plans.

1098 — For most homeowners, mortgage interest is tax-deductible, and this document will tell you how much you paid last year. Your lender is required to send you one of these forms if you paid at least $600 interest. Actually, your mortgage company probably won’t send you an official IRS form, but a document of its own design that contains the same data. In addition to the mortgage interest, other information often found on this statement includes amounts paid toward points to get the loan and escrow disbursements for real estate taxes (also deductible) and property insurance (not deductible).

1098-E — Are you paying back a student loan? The interest on your educational debt is reported on this form; your lender must send you one if the interest tally is at least $600. You may be able to deduct your student loan interest and possibly other loan-related amounts, such as origination fees and capitalized interest.

1099-INT — If you earned more than $10 in interest on a bank account or a certificate of deposit, you’ll get one of these forms for each account. Don’t dismiss this statement if you reinvested the interest. Tax law says you received the income even if you didn’t actually have it in your hand, and reinvested earnings are still taxable income. 1099-INT statements also are issued to people who cashed in savings bonds.

1099-DIV — Earnings from individual stocks and mutual funds are reported on Form 1099-DIV. This will show dividends and capital gains distributed over $10. As with reinvested interest, if you used the dividends or distributions to buy additional shares of the stock or mutual fund, you still have to pay taxes. However, the distributions and certain, qualified dividends are taxed at the lower capital gains rates.

1099-B — If you sold stocks, bonds or mutual funds, you will receive a 1099-B from your broker or mutual fund company. This will tell you the number of shares sold, when they sold and the amount you got for the sale. You’ll need this information, along with the date you bought the shares and the amount you paid for them, to figure your taxes. Beginning with 2011 statements, brokers will begin providing information on the basis (the cost of an asset plus some adjustments) of sold stock.
1099-G — Taxpayers who got a refund of state or local taxes last year will get this form. If you used those taxes as a deduction on your previous year’s federal income tax return, you’ll need to report the 1099-G amount on this year’s return. You don’t have to worry about reporting this refund as income, however, if you took the standard federal deduction instead of itemizing.

1099-K – If you received payments via credit or debit cards or from third-party payment processors, such as PayPal, Amazon and eBay, you might receive a 1099-K reporting those amounts. There are triggers for amounts ($20,000) and transactions ($200), so not every person who receives such payments will get a 1099-K. This income, however, is taxable and should be reported even without issuance of a 1099-K. The new statement is an attempt to get more information on such payments to the Internal Revenue Service.

1099-R — If you received a pension or a distribution from an individual retirement account or retirement plan, the 1099-R provides the details of these transactions. The form is issued by your broker, pension plan manager or mutual fund company. You’ll also get a 1099-R if you rolled over money in a retirement plan, usually a 401(k) to an IRA, or if you converted a traditional IRA to a Roth IRA. A rollover usually is not a taxable event, but a pension payout may be.

1099-MISC — Self-employed individuals who earned $600 or more should get a 1099-MISC from the employer. You should get a separate 1099-MISC for each independent job you had during the previous tax year.

Late-arriving forms

There are a couple of statements you might need for your tax records, but because of the intricacies of the financial arrangements they cover, the documents do not always arrive before the April filing deadline. But if you get an extension to file, you shouldn’t have any issues.

Form 5498 — Any contributions made during the calendar year to any individual retirement accounts are reported on this form. The 5498 shows traditional IRA contributions that might be deductible on your tax return, as well as any rollovers, including a direct rollover to a traditional IRA, made during the last tax year. It also reports amounts recharacterized from one type of IRA to another. It notes any amounts converted from a traditional IRA, simplified employee pension or savings incentive match plan for employees to a Roth IRA.

Form 5498-ESA — Contributions to Coverdell education savings accounts, formerly known as Education IRAs, previously were reported on Form 5498, but these plans now are tracked on this statement. The youngster named as account beneficiary should get a copy of this document by April 30.

Schedule K-1 — Finally, if you received money from an estate, trust, partnership or S corporation last year, you should get a Schedule K-1. However, because of the complexity of many of these arrangements, account managers tend to send out K-1s later in the tax season — sometimes not until after the April filing deadline.

Because you do need to know this amount of K-1 income to file your return, taxpayers who get K-1s tend to file Form 4868, Application for Automatic Extension of Time to File, to get six more months to get all their tax statements in hand. With the extended October deadline now approaching, you should have your K-1 in hand.

Clergy Financial Resources Reminds Parents of Ten Tax Benefits

Your kids can be helpful at tax time. That doesn’t mean they’ll sort your tax receipts or refill your coffee, but those charming children may help you qualify for some valuable tax benefits. Here are 10 things Clergy Financial Resources wants parents to consider when filing their taxes this year.

1. Dependents
In most cases, a child can be claimed as a dependent in the year they were born.

2. Child Tax Credit
You may be able to take this credit for each of your children under age 17. If you do not benefit from the full amount of the Child Tax Credit, you may be eligible for the Additional Child Tax Credit.

3. Child and Dependent Care Credit
You may be able to claim this credit if you pay someone to care for your child or children under age 13 so that you can work or look for work.

4. Earned Income Tax Credit
The EITC is a tax benefit for certain people who work and have earned income from wages, self-employment or farming. EITC reduces the amount of tax you owe and may also give you a refund.

5. Adoption Credit
You may be able to take a tax credit for qualifying expenses paid to adopt an eligible child. If you claim the adoption credit, you must file a paper tax return with required adoption-related documents.

6. Children with earned income
If your child has income earned from working, they may be required to file a tax return.

7. Children with investment income
Under certain circumstances a child’s investment income may be taxed at their parent’s tax rate.

8. Higher education credits
Education tax credits can help offset the costs of higher education. The American Opportunity and the Lifetime Learning Credits are education credits that can reduce your federal income tax dollar-for-dollar.

9. Student loan interest
You may be able to deduct interest paid on a qualified student loan, even if you do not itemize your deductions.

10. Self-employed health insurance deduction
If you were self-employed and paid for health insurance, you may be able to deduct any premiums you paid for coverage for any child of yours who was under age 27 at the end of the year, even if the child was not your dependent.

Clergy Financial Resources

Clergy Financial Resources is a national accounting and finance organization serving churches and clergy since 1980. They have an unparalleled tax expertise on the complex issues associated with clergy tax law, clergy taxes, clergy compensation and church payroll. Clergy Financial Resources is a valuable resource for clergy, churches and denominations.

Keep the IRS off your back this month – W-2 & 1099 Filing

It’s time to mail out those W-2s and 1099s again. Yes, it feels like a waste of time and money, but pay attention: The IRS takes this very, very seriously.

It’s a January ritual as inevitable as the collapse of New Year’s resolutions: The mailing of W-2s and 1099s. While your employees may regard their arrival as almost a natural phenomenon, like January frost, you know better. Someone has to be responsible for filling out those tallies of the previous years’ wages and contract income and getting them into the hands of the employees. And, as with everything else concerning your church, that responsible party could be you.

There is a reason you need to pay attention to this duty now: Deadlines are fast approaching. For any worker whom you paid more than $600 in 2011, you must do two things: (1) make sure the employee or contractor receives the proper form before the end of the month; and (2) make sure that you file this information with the IRS.

How to make the deadline
The due date is generally January 31. You meet the IRS requirement if you’ve properly addressed the appropriate form (W-2s to employees and—usually—1099-MISCs to contractors) and mailed it on or before that deadline.

If you just can’t make the January 31st deadline, don’t fret—as long as you have a good reason. Just send a letter to the IRS before January 31 with details about your church, the employee and the reason for the delay, and ask for an extension. For more information, like the mailing address and the specific information you have to include in your request for extension, go to If you can’t find the employee or contractor for some reason, you still have to keep copies of the undelivered tax documents for four years.

The downside for failing to issue a correct Form W-2 or 1099 in time is no joke: Penalties range from $30 to $100 per document. That can add up fast, and it doesn’t stop adding up until it reaches the small penalty cap of $500,000. Worse: if the IRS determines that your failure to file is the result of intentional disregard of its requirements, the penalty is at least $250 per payee statement with no maximum. If you willfully file a fraudulent claim that you made payments to a person when you didn’t, that person can also sue you for damages of $5,000 or more.

Why you can’t file and forget
Remember that your obligation does not end once the forms are winging their way to your employees. You also have to get the data to the IRS. Generally, you have until February 28 (yes – even in a leap year!) to loop the tax agency in.

If you are not sure whether a person working for you is a contractor or an employee, you need to do some research to get the right answer. It’s a complicated issue, most clergy are recognized as dual status employees and do require form W2. If you control only the result of a person’s work with no job description, you should probably file a 1099. The worker’s classification is something that you have to get right – there are tough penalties for improperly treating employees as contractors.
If you are scrambling right now to gather all this information and get it to your employees and the IRS, be sure to take some time to think about how to avoid the same last-minute rush next year. Filing paperwork for the IRS is nobody’s core business (except accountants and payroll firms), and you don’t have to get very big before wage accounting isn’t worth the headache—or the risk. Let someone else do that for the IRS.

A FAST and SIMPLE Solution for Church W2 Forms
Easy W2 filing is a Click Away

2012 Church & Clergy Tax Guide – NOW AVAILABLE

2012 Church & Clergy Tax GuideThe 2012 Church & Clergy Tax Guide is now available for shipping.

Get a better understanding of U.S. tax laws as they relate to pastors and churches with the 2012 Church & Clergy Tax Guide; learn how tax laws apply to you, how to correctly report your federal income taxes and social security taxes, understand relevant exemptions, and reduce your tax liability as much as possible. You’ll also find easy-to-understand charts and real-life illustrations.

This book is designed to be a resource for ministers and also church treasurers, board members bookkeepers, attorneys, CPA’s and tax practitioners throughout the year. Entire chapters are devoted to the tax laws you have the most questions about, including:

-Tax changes to help prepare your 2011 returns
-Federal church reporting requirements
-Designated contributions
-Charitable contributions
-Business expense reimbursement
-Tax liability reduction
-Clergy retirement plans

Book – $39.95

CD (PDF) – $39.95

Clergy Financial Resources Has Moved!

At the beginning of January 2012, Clergy Financial Resources completed their move to a new office building in Maple Grove, MN.

As Clergy Financial Resources’ business has expanded nationally, our demand for office space has grown beyond the capacity of our current location. Our new office space will not only meet our current needs, it will allow for future growth.

It is our vision that this step will provide a more professional position in the marketplace, along with the tradition of serving clergy with competence, integrity, and objectivity.

We plan to utilize the new office space as an education and training center for clergy and the church. This allows us to continue to be the leader in the religious community with more innovative products and services.

Many factors contributed to the decision to move to a new office building. The new location will allow us the ability to continue to serve our clients with the latest in technology, exceptional service and value.

We truly believe this move will prove to be a significant milestone in the growth and success of Clergy Financial Resources.

We sincerely appreciate the opportunity to serve you.

Clergy Financial Resources
11214 86th Avenue N.
Maple Grove, MN 55369

Tel: (763) 425-8778
Fax: (763) 421-6875

It’s beginning to look a lot like…Tax Season.

The income tax filing season has begun and important tax documents should be arriving in your mailbox. Even though your return is not due until April, you can make tax time easier on yourself with an early start. Here are Clergy Financial Resources’ top 7 tips to ensure a smooth tax-filing process.

1. Gather your records: Round up any documents you’ll need when filing your taxes: receipts, canceled checks and other documents that support income or deductions you’re claiming on your return.

2. Be on the lookout: W-2s and 1099s will be coming soon; you’ll need these to file your tax return.

3. Order your Clergy Tax Organizer: Each year, we publish a new tax organizer, which is designed to be used as a learning tool and reference guide. This organizer will assist you in gathering the information needed to prepare your current tax return.

Click the following link to order your Clergy Tax Organizer, After your order is processed, you will be able to download the 2011 organizer. There is a fee to order the Clergy Tax Organizer, which is required to complete your tax return. However, this fee will be applied against your tax preparation charge and is not an additional cost.

4. Have a question? Contact Clergy Financial Resources to answers your tax questions about credits, deductions, general filing questions and more.

5. Try IRS e-file: IRS e-file is the safe, easy and most common way to file a tax return. Last year, 79 percent of taxpayers – 106 million people – used IRS e-file. Many tax preparers are now required to use e-file. If you owe taxes, you have payment options to file immediately and pay by the tax deadline. Best of all, the IRS issues refunds to 98 percent of electronic filers by direct deposit within 14 days, if there are no problems, and some may be issued in as few as 10 days.

6. Consider direct deposit: If you elect to have your refund directly deposited into your bank account, you’ll receive it faster than a paper check in the mail.

7. Review! Review! Review! Don’t rush. We all make mistakes when we rush. Mistakes slow down the processing of your return. Be sure to double check all the W2s, Social Security numbers, receipts, mileage and records logs and any information on your organizer as these are the most common errors. Don’t panic! If you run into a problem, remember Clergy Financial Resources is here to help.

2011 Clergy Tax Organizer – Now Available – $45.00

We are pleased to offer you the chance to discover the power of our innovative Internet-based products. The new 2011 Clergy Tax Organizer Online, a tax preparation guide.

Each year we publish a tax organizer for clergy, which is designed to be used as a learning tool and reference guide. This organizer will assist you in gathering the information needed to prepare your current tax return. We do this to provide you with better and faster service, but also to get you started with sound record keeping practices for the following year.

The Clergy Tax Organizer is available in two formats.

Clergy Tax Organizer booklet
(non-internet version) which is mailed to you and completed by hand. The booklet is now available for shipping.

Clergy Tax Organizer Online is the most popular format and is available for immediate download from the Internet. This organizer is an editable PDF which is saved and edited on your desktop. This gives you the ability to complete the organizer on your computer and return to us by email. So why not take a moment and order your organizer today. The online organizer is available for download today.

The Clergy Tax Organizer contains special pages associated with clergy income, housing, auto, professional expenses and everything else. We use this comprehensive organizer format to address the standard tax laws and the special tax laws designed for clergy.

All clergy must keep accurate records. The tax organizer is not the same thing as an expense log. However, the clergy tax organizer will help you categorize your year-end income and expenses. Plus, has all the questions that the IRS requires you to answer about housing, ministry mileage, professional expenses, travel, entertainment, and other expenses.

This clergy tax organizer is your assurance that you won’t miss any important tax information and is the most comprehensive organizer available to clergy. The Internal Revenue Service has recognized this organizer as one of the most thorough available.

If you enroll in our Clergy Tax Preparation service, the Clergy Tax Organizer is required to complete your tax return. The organizer fee will be applied against your tax preparation charge and is not an additional cost.

When your organizer is completed, please forward your organizer to us along with all your W-2s, 1099 forms and any other record of income. Also, forward any forms and/or correspondence that you have received from the IRS, your state, and a copy of your 2010 tax return (if you have not done so previously).

Clergy Financial Resources
9653 Trillium Court N.
Minneapolis, MN 55316

Tel: 763.425.8778
Fax: 763.421.6875
Web site:
Online Customer Support:
Schedule an appointment with us online:

Church & Clergy – End of the Year Tax Checklist

December is a very busy time for churches and clergy. Extra services, Christmas shopping and holiday parties can fill your schedule before you know it. The end of year is an important time of the year for financial/tax issues as well. Here are a few things churches and clergy should be thinking about as we approach the end of the year.


Christmas Gifts To Employees

    • In almost all cases, Christmas gifts given from the church to its employees are taxable income and need to be reported on employee’s W-2 form.

End of the Year Contributions

    • December 25 will be the last Sunday for 2011 charitable contributions. Donations/offerings made on during Sunday, January 1, 2012 services will be  counted as 2012 charitable contributions(even if you wrote the check in 2011). If you mail contributions, they need to be mailed in 2011 for it to be counted as a 2011 charitable contribution.

Reclassifying Workers

    • January 1 is the ideal time to change the classification of an employee.

Revised W-4 Forms

    • If employees want to change the amount withheld for taxes in 2012, they should fill out and submit a 2012 W-4 form to the church.

Donor Notice

    • Inform members of your congregation that they need to wait to file their taxes until their “2011 Yearly Contribution Summary” is available. This summary will have a complete listing of 2011 charitable contributions made to the church.


Housing/Parsonage/Manse Allowance

    • Every year, the church should approve a housing allowance designated by its clergy. A clergy’s housing allowance expires at the end of each year. In order to have the housing allowance automatically redesignated, the phrase “I request that the amount shown above be designed for housing allowance for the calendar year 2012 and all future years until modified or revoked” should be included in the designation. A housing allowance cannot be set up retroactively. To designate/alter your housing/parsonage/manse submit a 2012 Housing/Parsonage/Manse Allowance Form to your church’s finance committee for approval.

Voluntary Withholding

    • Clergy are allowed to have taxes voluntarily withheld from their taxes in lieu of making quarterly estimated payments. If a clergy prefers this optional withholding method, they should submit a W-4 to the church. On “Line 5” write exempt and on “Line 6” write how much  you want withheld from each check.

IRS Updates 2012 Business and Ministry Mileage Rates

The Internal Revenue Service has issued its 2012 optional standard mileage rates that can be used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

Beginning Jan. 1, the standard mileage rates for the use of a car, van, pickup or panel truck will be 55.5 cents per mile for business activities, 23 cents per mile driven for medical or moving purposes, and 14 cents per mile in service of charitable organizations.

The rate for business miles is unchanged from the midyear adjustment that became effective July 1. The medical and moving rate has been reduced by 0.5 cents per mile.

The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile, while the rate for medical and moving purposes is based on the variable costs determined by the same study.

2012 Standard Mileage Rates

Mileage Rate
Jan. 1- Dec 31

55.5 cents

55.5 cents

23 cents

23 cents

14 cents

Education Expense (Job related only)    
55.5 cents

Job Seaching (same occupation)    
55.5 cents

48 cents


Clergy Financial Resources

Clergy Financial Resources is a national accounting and finance organization serving churches and clergy since 1980. They have an unparalleled tax expertise on the complex issues associated with clergy tax law, clergy taxes, clergy compensation and church payroll. Clergy Financial Resources is a valuable resource for clergy, churches and denominations.