There should be clear separation of duties between those responsible for handling and recording the income of the congregation and those responsible for handling the disbursements of the congregation. A strong system of internal controls safeguards the assets of the congregation and protects the character of the individuals handling cash or writing checks. The congregation…

Question: We want to hire an administrative assistant. Can we classify this person as an independent contractor during a 90-day try-out period and then, if they work out, hire them as a full-time employee at the end of the 90 days? Answer: It’s highly unlikely that an administrative assistant would meet the criteria for classification…

The church can structure benevolence payments either as tax deductible contributions or nondeductible contributions. The most difficult kind of benevolence contribution is a contribution that designates a specific recipient. The designation may be in writing, on a envelope accompanying the contribution, in a letter, fundraiser, or even oral. Ordinarily designated contributions to a benevolence fund…

Churches are required to classify each person that is hired as either a secular or clergy employee. This is a very crucial step in the hiring process. Clergy are taxed differently than secular employees and this treatment is mandated by law. It isn’t optional, so it is important to know who qualifies as secular or…

Let’s face it. Managing church payroll – and the avalanche of payroll regulations – means you’re under a lot of scrutiny, and you have to get it right. Each year sixty percent of the church W-2 forms are reported with errors. This is created by the lack of understanding of the reporting requirements of taxable…

When a church covers ministry related expense using an allowance or a non-accountable reimbursement, all those payments must be included with taxable salary on an employee’s W-2 and reported as taxable income. A non-accountable plan is a policy where the church pays a fixed amount each pay period and does not meet all the requirements…

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Q: I am an interim minister serving a church 100 miles away. This interim position will last less than a year. I know that driving between home and church is not deductible, but would this situation count as temporary employment so that I would be eligible for the standard mileage deduction? A: Commuting between your home and a…

Many churches help their ministers get into a home by providing money for a down payment.  These funds can be a taxable gift and become taxable income in the year they are received and may be designated as housing allowance or the congregations may elect to assist a minister with the purchase of a home by means…

The tax deadline for most clergy was Tuesday, April 18, 2017. We have some advice for those who missed the filing deadline.  File and pay as soon as possible. Clergy who owe federal income tax should file and pay as soon as they can to minimize any penalty and interest charges. There is no penalty for filing…