Tax responsibilities with starting a business
The tax responsibilities with starting a business Small business owners have a variety of tax responsibilities. The IRS knows that understanding and meeting tax obligations are vital to the success of all businesses, especially a new one. IRS.gov has the resources and information to help people through the process of starting a new business. Here…
How to Set Church Compensation Amounts
How to Set Church Compensation Amounts How does a church go about determining the amounts it should pay its ministers and other employees? Church boards, or those to whom they delegate, must determine what amounts to pay each staff position. The experience and competence of those making the decisions vary greatly from church to church….
Repairs vs. Improvements – Rental Property
Repairs vs. Improvements When you rent out a room in your home or you become a landlord of rental property, you’re entitled to deduct or depreciate your landlord expenses. Among these are the cost of improvements and repairs to the space you rent out. Whenever you fix or replace something in a rental unit or building…
Should I have a Social Security Allowance?
Should I have a Social Security Allowance? While ministers are employees for federal income tax reporting purposes, they are self-employed for Social Security purposes with respect to services they perform in the exercise of their ministry. This means that they must pay both the employee and the employer share of social security tax under the…
Repay student loans up to $5,250 tax-free
The Coronavirus Aid Relief and Economic Security Act (the “CARES Act”) provides a way for churches to provide both tuition, books, supplies, and student loan payments tax-free through January 1, 2026. Generally, a Section 127 Education Assistance Plan only allows the church to pay or reimburse tuition and other qualified educational expenses. Section 2206 of the CARES Act modifies…
What is exempt and non-exempt employee?
Exempt and non-exempt are classifications under the Fair Labor Standards Act (FLSA). That’s the federal law requiring that most employees receive at least minimum wage for each hour worked and overtime pay for hours worked over 40 in a workweek. Usually, employees who are entitled to both minimum wage and overtime are called non-exempt. Those…
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…
