Don’t Rush to File Your Return!
Instead of rushing to April 15 to file your taxes, you can file an extension. There’s no shame in an extension, and millions are processed every year. Everyone with an April 15 deadline can get six extra months by filing an extension form. You need to pay what you owe–the extension is to file your return…
Down Payment Qualify for Housing Allowance?
A down payment on a home may be excluded from income as a housing allowance, assuming it does not exceed housing limitation. You can exclude the lowest of the following three amounts from income for federal income tax purposes when the church or pension properly designates a housing allowance: The housing allowance designated by the…
Is Clergy Auto Allowance taxable?
An auto or gas allowance is a cash payment given to you each pay period by the church for the purpose of covering your automobile ministry expenses. When you receive an auto allowance, it is considered taxable “compensation” and included with your wages reported in Box 1 on Form W-2. Federal tax law allows you…
Benevolence Funds
Benevolence gifts are given to needy individuals or families. Benevolence gifts made directly by a donor to needy individuals are not deductible. To qualify for a charitable deduction, contributions must be made to a qualified organization.
Can I amend my housing allowance?
The housing allowance resolution can be amended at any time. However, it can only be applied prospectively. A pastor’s amended housing allowance must be established or designated by the church. The preferred way to do this is for the church council/board to adopt the housing amendment resolution in the minutes of the meeting.
Are you an Employee or Contractor?
Generally, an employee has an ongoing relationship with the employer which includes a job description and compensation paid by the hour or salary. A contractor would have an irregular relationship, no job description and paid by contract only. This information is important when structuring an employee vs contractor. Employee misclassification often can trigger IRS attention
Which organizations can receive deductible charitable contributions.
You can ask any organization whether it is a qualified organization, and most will be able to tell you. Or go to IRS.gov. Click on “Tools” and then on “Exempt Organizations Select Check” (www.irs.gov/Charities-&-Non-Profits/Exempt-Organizations-Select-Check). This online tool will enable you to search for qualified organizations.
Keeping Employee Files
In order to comply with regulations and be able to find information quickly when necessary, churches should actually keep several different files for all their employee records. Typically, those files should be: The Personnel File This file should only contain information that relates to an employee’s job and job-related decisions, such as applications, performance reviews,…
Exempt or Nonexempt? Actual Job Duties Matter, Not Job Title
Determining an employee’s proper classification requires a fact-driven assessment that looks beyond a job description and examines exactly what the employee does on a daily basis and performed during the last two years. It is not uncommon for an employer to state, “we pay all of our employees as salaried or a set rate for…
Three Administrative Steps when Hiring Employees
Step 1. Set up Records for Withholding Taxes According to the IRS, you must keep records of employment taxes for at least four years. Keeping good records can also help you monitor the progress of your church, financial statements, identify sources of receipts, keep track of expenses, and payroll tax returns, etc. Below are three types of withholding taxes you…
