Worker’s Compensation Insurance and Unemployment Benefits
Worker’s Compensation Insurance and Unemployment Benefits During this season when we pause to celebrate Labor Day, two important labor issues for churches to consider are worker’s compensation insurance coverage and unemployment taxes and benefits. Both of these issues can be confusing for churches. Worker’s Compensation Insurance: Worker’s Compensation insurance provides benefits for employees who are…
Safeguarding Form 4361 – Opting out of Social Security
Safeguarding Form 4361 – Opting out of Social Security A minister who wishes to be exempt from social security/Medicare tax must file a Form 4361 with the IRS for approval. Before your application can be approved, the IRS must verify that you are aware of the grounds for exemption and that you want the exemption…
What is segregation of duties?
What is segregation of duties? The segregation of duties is the assignment of various steps in a process to different people. The intent behind doing so is to eliminate instances in which someone could engage in theft or other fraudulent activities by having an excessive amount of control over a process. In essence, the following…
Is the Housing Allowance a deduction or exclusion?
Is the Housing Allowance a deduction or exclusion? The housing allowance is an exclusion from income, not a deduction. This means that the amount claimed is never reported to the Internal Revenue Service (IRS) as part of your annual income. A housing allowance can be taken only if the amount to be excluded is officially…
What clergy need to know about estimated payments
What clergy need to know about making 2021 estimated tax payments The United States income tax system is a pay-as-you-go tax system, which means that you must pay income tax as you earn or receive your income during the year. You can do this either through withholding or by making estimated tax payments. If you didn’t…
New Educators Guidelines – COVID-19 protective items
Educators can now deduct out-of-pocket expenses for COVID-19 protective items Eligible educators can deduct unreimbursed expenses for COVID-19 protective items to stop the spread of COVID-19 in the classroom. COVID-19 protective items include, but are not limited to: face masks; disinfectant for use against COVID-19; hand soap; hand sanitizer; disposable gloves; tape, paint, or chalk…
Mid-Year Review of Church Budget
Mid-Year Review of Church Budget Whether your church’s budget is based on the calendar year (January – December), or a different starting point based on the fiscal year, it is a good practice to re-visit the budget at some point during the year to see if projections are close to actual numbers. In light of…
Employees Versus Independent Contractors
Employees Versus Independent Contractors One of the most common employment mistakes that churches make is misunderstanding the difference between an employee and an independent contractor. Each employee should receive a Form W2 from the church each year. Employees are subject to a wide array of employment laws and tax requirements. On the other hand, each…
Understanding Types of Church Compensation
Understanding Types of Church Compensation One of the hardest things to determine as the leader of a church is what to pay your staff members. From your pastor and youth pastor to your finance director, what should their salaries be? While part of this will ultimately depend on your church’s budget, paying your staff fairly…
