Determining the correct social security tax for clergy is often confusing. Clergy pay social security tax under the Self-Employment Contributions Act (SECA), not under the Federal Insurance Contributions Act (FICA). Clergy engaged in the exercise of ministry are always treated as self-employed for social security tax purposes. A congregation should never deduct FICA tax from the pay of a…
The IRS’s basic rule is that a gift must be “delivered” to the church by December 31 for it to count as a contribution for that year. The date of delivery depends on how the gift was made and delivered. Here is a quick summary of the year-end cutoff for various gift delivery methods: In…
Generally, a taxpayer may deduct the cost of uniforms as a business expense if the taxpayer must wear them on the job and they are not suitable for street wear. In Ratcliff, the Tax Court denied a minister a deduction for suits worn to church because the church did not require them. Rather, the wearing of a…
When a church hires an employee, one of the initial decisions that must be made is whether to treat the worker as clergy, non-clergy employee or contractor. This decision may seem insignificant, but it has huge implications when it comes to payroll. Ministers have what is commonly referred to as “dual tax status.” For federal…
According to the Bureau of Labor Statistics, more than 70% of employees have access to paid days off from work for sick or vacation time. Although these are common paid time off programs, sick and vacation days aren’t the only time off work you can offer. Get the scoop on different types of paid time off below….
There are specific rules that dictate whether you should pay someone as an employee or as an independent contractor. There is no single test for determining if an individual is an independent contractor or an employee. Employee misclassification has always been an important issue and often can trigger IRS attention. Generally, an employee has an…
What benefits does your church offer its employees? This question tends to pop up a lot in job interviews—often right after the interviewer asks “Do you have any questions for me?”. And employee benefits are a fair thing to inquire about; most of us would like to know the perks that a job will give…
Are you a church leader preparing compensation packages for multiple positions? Or an individual seeking guidance about your own compensation package? The 2018 Compensation Handbook for Church Staff offers everything you need—including expert articles and resources relative to ministry compensation. Churches often struggle to determine pay levels for their pastors and staff. And those in…
You may find it helpful to begin by considering the goals of a compensation package. A church should provide its staff with adequate income so that they can fulfill their roles without undue concern about current and future financial needs. Freedom from financial anxiety lets the minister focus on his or her service. It also helps your church…
Payroll is complicated. There are a lot of tasks, laws, forms, and calculations. With so many things to remember, it’s easy to make a mistake. You should not take payroll errors lightly. Mistakes can result in penalties, interest, and even jail time. The best way to avoid payroll mistakes is by knowing what to look…
