STANDARD MILEAGE RATES – Beginning January 1, 2020, the standard mileage rates will be:
- 57.5 cents per mile driven for business use, down one half cent from the 2019 rate.
- 17 cents per mile driven for medical or moving purposes, down three cents from the 2019 rate.
- 14 cents per mile driven in service of charitable organizations.
- GOOD NEWS FOR HOUSING ALLOWANCE – The legal challenge to the housing allowance has been resolved and this valuable benefit to ministers remains intact.
- PARKING LOT TAX REPEALED – The Parking Lot Tax approved in the Tax Cuts and Jobs Act of 2017 was repealed in December 2019. Parishes may file for a refund of taxes paid for 2018 and 2019.
- IRA REQUIRED MINIMUM DISTRIBUTIONS – IRAs will now be subject to required minimum distributions (RMD) when the account owner reaches the age of 72. Previously, the age was 70 ½.
- UPDATED 2020 FORM W-4 FOR WITHHOLDING OF FEDERAL INCOME TAXES – The IRS has redesigned Form W-4 for 2020 in an effort to reduce the form’s complexity and to increase the accuracy of the withholding of federal income tax. Employees who have furnished Form W-4 in any year before 2020 are not required to furnish a new Form W-4. However, all employees hired in 2020 must complete the new, updated W-4.
- REVIEW OF W-2 FORMS – It is estimated that 60% of W-2’s provided by churches are not completed properly. Key areas where errors occur are as follows:
- Clergy Housing Allowance should not be included in Box 1 wages. The housing allowance should be reported in Box 14 and also included in Box 16 State wages.
- Clergy GTL (Group Term Life Insurance) imputed value should be included in Box 1 wages and also reported in Box 12 (Code C). The amount does not have to be included in Box 16 State or Box 18 Local wages.
- The imputed value of an employee’s use of an employer-paid vehicle for personal reasons should be included in the employee’s Box 1 wages and also reported in Box 14. The amount does not have to be included in State or Local wages.
- Both employer and employee contributions to an employee’s Health Savings Account should be reported in Box 12 (Code W) and should not be included in Box 1 wages.
- Boxes 3 and 5 for Social Security and Medicare wages for clergy should be zero since clergy are considered self-employed and pay their Social Security and Medicare taxes by filing Form 1040 (Schedule SE) Self-Employment Tax.
- SECA reimbursements to clergy should be included in Box 1 wages and also included in State and Local wages.
- Employee (Lay and Clergy) contributions to 403(b) retirement plans should not be included in Box 1 wages. The amount should be reported in Box 12 (Code E).
Please feel free to contact me with any questions about the above information.
Faithfully,
Kathi Workman, Canon Treasurer
kworkman@episcopalpgh.org or 412-721-0853 ext. 259
kworkman@episcopalpgh.org or 412-721-0853 ext. 259