Like any aspect of the church, finalizing year-end payroll and starting a new year is best done with some planning and preparation ahead of time. Payroll processing is just another part of the financial responsibility–knowing the expectations ahead of time, and figuring out a timeline around them, will help you make the best decisions for the church.
Clear PTO Accrual Balances for Year-End
Calculating PTO by hand is not a simple task. There are many rates to choose from and the calculations aren’t always intuitive. For this reason, most churches just end up using a yearly accrual rate. This method is easy. You just have to decide how many days employees should get per year and give it to them in a lump sum. However, if you’re a little more math savvy, you can calculate PTO with other accrual rates that may be a better fit for your church
Update employee deductions and income
The first payroll of the year is the perfect time to review and update your employee deductions and income, such as:
- Life Insurance
- Retirement deductions such as 401(k)*
- Other voluntary deductions
*You should plan to change retirement deductions based on the new limits for 2021. Limits generally change from year to year. Make sure you become familiar with the new limits and update your employee’s deductions, if necessary.
Obtain new W-4 form (if applicable)
The Internal Revenue Service (IRS) released a new federal Form W-4, which went into effect on January 1, 2020. New employees, who began on or after 1/1/20, and existing employees, who wish to adjust their withholding, must use the new Form W-4.
You can download the new Form W-4 from the IRS website.
Clergy Financial Resources offers several options to help you with your tax questions or filing. We have listed three great options to get started.
Pro Advisor I Tax Support
This support service provides you comprehensive answers to your notice questions. This support service is available at a flat rate of $45.00 for each 30-minutes session.
Online W-2 or 1099 Filings
This service is design for churches that would like to simplify the process of filing the W-2 or 1099 Forms. When your year-end data is ready, enter it on the W2 data screen. Then relax! We’ll do the rest. Let us e-file, print, and mail recipient copies and send you a confirmation that it’s all done. W-2s have never been easier!
Full Church Payroll, Simplified
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. Let’s Clerry Financial Resources help with payroll compliance.
Clergy Financial Resources serves as a resource for clients to help analyze the complexity of clergy tax law, church payroll & HR issues. Our professionals are committed to helping clients stay informed about tax news, developments and trends in various specialty areas.
This article is intended to provide readers with guidance in tax matters. The article does not constitute, and should not be treated as professional advice regarding the use of any particular tax technique. Every effort has been made to assure the accuracy of the information. Clergy Financial Resources and the author do not assume responsibility for any individual’s reliance upon the information provided in the article. Readers should independently verify all information before applying it to a particular fact situation, and should independently determine the impact of any particular tax planning technique. If you are seeking legal advice, you are encouraged to consult an attorney.
For more information or if you need additional assistance, please use the contact information below.
Clergy Financial Resources
11214 86th Avenue N.
Maple Grove, MN 55369
Tel: (763) 425-8778
Fax: (888) 876-5101