I recall the first year my wife and I filed a joint return. I was a graduate student with a part-time job. She was fresh out of nursing school and employed at a local hospital. When we prepared our tax return, we owed $400. That was a lot of money in 1970, especially for people in our situation. What happened? We were victims of having multiple sources of income between the two of us and did not have the correct amounts withheld from our incomes.
You have decided to take the plunge and become a driver for Uber, Lyft or some other rideshare program. Congratulations! You are now a small business owner and your tax return just got more complicated. The income you earn from Uber is taxable and must be reported on Schedule C of your 1040. However, you may deduct expenses incurred in earning this income.
In January, you should receive a Form 1099-MISC from Uber or whatever company you drive for. The amount should be Read More
“Passion is absolutely necessary to achieve any kind of long-lasting success.” In a minute, I will share with you who that quote belongs to but for this moment remember that passionate people have very strong beliefs. As I was arranging speakers for the Internet Tax Summit, the passion these tax experts have in protecting taxpayers and businesses was prevalent. You know when you encounter people in life with purpose and passion for what they do; you know they get things done. You can expect to encounter tax professionals who get things done at TaxConnections Internet Tax Summit. You are invited to meet and interact with Tax Experts in this historical event where individual taxpayers and business leaders meet tax experts during an online event. It is free so all you need to do is register and we will send you a link to access the Internet Tax Summit. Read More
The United States Supreme Court has heard arguments in the Obergefell v. Hodges case which basically seeks to legalize same-sex marriage in the United States. While the court has not yet announced its verdict, there is concern that, if it is legalized, the action could threaten the tax-exempt status of churches and other religious organizations. Albert Mohler, President of Southern Baptist Theological Seminary has stated that this issue “may well be the greatest threat to religious liberty of our lifetime.
During discussions before the Court, three religious liberty issues were raised. First, Justice Scalia asked counsel arguing for same-sex marriage if clergy would be required to perform same-sex marriages. The response was that a constitutional right for such unions would not require clergy of any faith to perform these ceremonies. Read More
An unusual alliance of religious and secular groups has recently called for the IRS to clarify its rules regarding non-profit organizations and their political activity. Leaders from the Evangelical Council for Financial Accountability (ECFA), Alliance Defending Freedom (ADF), the Public Citizen, and the Center for American Progress (CAP) met in Washington to discuss what the IRS could do to lend some clarity to this issue. ECFA seeks to make Christian non-profit organizations accountable through adherence to its Seven Standards of Responsible Stewardship; ADF has long advocated more freedom for ministers in addressing political issues from the pulpit. The Public Citizen is a non-profit, consumer rights advocacy group and think tank while the Center for American Progress is a progressive public policy research and advocacy organization. According to CAP, the Read More
Despite the IRS ban on church political activity, there is a large and growing group of pastors and churches who are actively supporting the repeal of the Johnson Amendment banning church and non-profit political activity.
Each year in October, the Alliance Defending Freedom (ADF) sponsors Pulpit Freedom Sunday, in which pastors take to the pulpit and engage in banned political activity. In 2014, over 1,800 pastors participated with the large majority of them preaching sermons presenting their view of the biblical perspectives on the positions of elected candidates and signed a statement agreeing that the IRS should not control the content of a pastor’s sermon. Additional pastors signed the statement, but did not preach to that effect. Read More
We previously discussed the prohibition against a church or religious organization from participating in political campaign activities. The specific prohibitions that are a part of the law were discussed. However, a church or religious organization is not being placed in a situation where is cannot express opinions on the issues of the day, nor are they expected to “put its head in the sand” in regard to the political process.
A church or religious organization is permitted to engage in lobbying activities. These activities are limited, however, as the organization must maintain a focus on its exempt purpose. If the IRS determines that the organization is devoting more than an “insubstantial” part of its total activities during the year to lobbying activities, its tax-exempt Read More
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Our society is very much a political society. Even though not everyone may vote for a number of reasons, citizens are aware of elections and often the issues that are matters of discussion. Opinions are plentiful, some are not factually-based, but that does not deter the individual from expressing his or her opinions. Political campaigns are pervasive – we see advertising on various media, our mailboxes are filled with flyers from competing candidates, our phone often rings with pitches from various candidates. With everyone seemingly getting in on the action, there may be a temptation for a church or non-profit organization to throw in their two cents worth.
At one level, it makes sense for an organization to take a stand in favor or opposition to a candidate. For example, a church may be a strong supporter of the nation of Israel. One Read More
We have probably all heard of fraudulent phone calls from groups posing as the IRS. The caller typically demands money or says you have a refund due and asks for private information. If you don’t cooperate, they threaten you with asset seizure, jail time, or other actions. These scams are very pervasive, as I have personally received three of them in the past week. Do not give these callers any personal information.
In a release regarding these calls the IRS, states that they will never:
1. Call to demand immediate payment, nor will we call about taxes owed without first having mailed you a bill.
2. Demand that you pay taxes without giving you the opportunity to question or appeal Read More
An endowment is a donation of money or property to a non-profit organization for the ongoing support of the organization. It may be structured that the organization leaves the principal amount intact and is only permitted to spend the income from the investments in the endowment funds. Less commonly, the gift may be structured allowing the organization to spend the principal amount. If this is the case, there may be restrictions placed upon the amount of principal that may be spent annually. Many non-profit organizations, most notably colleges and universities may have endowments of millions of dollars. It is less common for a church to have endowment funds, although it is not unheard of.
Not everyone favors a church having endowment funds. Some feel that any funds in Read More
The IRS has long held that severance payments from an employer to an employee are wages. As such, they are subject to income, as well as payroll taxes that include social security and Medicare. In a 2014 case (U.S. vs. Quality Stores) a Michigan court ruled otherwise – that social security and Medicare taxes are not due and payable on severance payments. The Sixth Circuit Court of Appeals, surprisingly, upheld the lower court ruling.
This ruling put the IRS in a bind. If the ruling were to stand and be applied nationwide, hundreds of millions of dollars could be at stake. Indeed, in a matter of months, over 3,000 claims for payroll tax refunds were filed with the IRS. All of these claims were disallowed if not coming from the Sixth Circuit. The IRS then appealed to the United States Supreme Court. Read More
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