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…
Box 14 of the W2 Form
Box 14 of the W2 Form is often viewed as an optional box by secular employers to report miscellaneous information to their employees. However, due to the complexity of clergy tax law, it has always been highly recommended by the IRS and an industry standard to report housing allowance in box 14. This best practice…
How long should we keep employment records
We always recommend to keep all employment tax records for at least six years after filing the 4th quarter for the year. Records should include: Your employer identification number. Amounts and dates of all wage, annuity, and pension payments. The fair market value of in-kind wages paid. Names, addresses, social security numbers, and occupations of…
What is FICA?
The Federal Insurance Contributions Act (FICA) is a U.S. law requiring a deduction from paychecks and income that goes toward the Social Security program and Medicare. Both employees and employers are responsible for sharing the FICA payments. The church is required to pay Social Security and Medicare (FICA) taxes on all non-clergy employees. All nonprofits must withhold…
