Are Gift Certificates to Church Staff Taxable?
Are Gift Certificates to Church Staff Taxable? When churches want to express appreciation to their pastors or staff—especially around holidays or ministry milestones—gift certificates often seem like a simple, generous solution. However, under U.S. tax law, gift certificates given by a church to its employees are almost always taxable, regardless of intent. Understanding why requires…
When Are W‑2 and 1099 Forms Required to Be Filed.
When Are W‑2 and 1099 Forms Required to Be Filed Churches function as employers, contractors, and ministry organizations—but despite their nonprofit status, they are not exempt from federal payroll reporting laws. The IRS requires churches to properly classify workers and file W‑2 and 1099‑NEC forms each year, just like any other employer. Failing to follow…
Why You Should Update Your W-4
Your Form W-4 determines how much federal income tax is withheld from your paycheck. Keeping this form up to date ensures that your tax withholding matches your current situation—helping you avoid surprises at tax time. Several major life events can significantly impact your tax liability. If any of the following apply to you, it’s a…
Your Guide to FSA Contributions
Reporting Flexible Spending Account (FSA) contributions on a W-2 depends on the type of FSA and who made the contributions. Here’s a breakdown: Where to Report FSA Contributions on Form W-2 Dependent Care FSA Box 10: Report the total amount of dependent care benefits provided to the employee, including: Amounts the employee elected to contribute…
New $2,000 1099-NEC Filing Threshold
 What Clergy and Churches Need to Know The IRS has announced a significant change to Form 1099-NEC reporting requirements, which will impact churches, ministries, and clergy-related organizations starting in 2026. Under the OBBB Act, the threshold for issuing Form 1099-NEC will increase from $600 to $2,000, offering welcome relief to many small ministries and nonprofits….
How to report social security allowance
When completing a W-2 for an ordained pastor who receives a salary and an additional allowance for Social Security and Medicare taxes (often referred to as a SECA allowance), the salary and the SECA allowance should be included in Box 1. Here are the steps to do so: Box 1 – Wages, Tips, and Other…
W-4 Instructions for Clergy
The W-4 form consists of five steps. Since not every step applies to all employees, some sections may justifiably be left blank. Step 1 Clergy and non-clergy individuals must provide personal information, ensuring that the name, address, and Social Security number entered match the records on file with Payroll. This section also requires you to…
Determining Worker Classifications
Exempt or Non-exempt? Classifying exempt and non-exempt church employees is just as crucial as distinguishing between independent contractors and employees. Generally, this involves a straightforward separation between salaried (exempt) and hourly (non-exempt) employees, but that is not the only criterion. Organizations must adhere to the Fair Labor Standards Act (FLSA) guidelines to determine the classification…
Fines for Mismatched TIN and Name?
Did you know that submitting a mismatched Taxpayer Identification Number (TIN) and name combination can result in fines? If a mismatched name/TIN combination is submitted on your W-2 or 1099 filings, the IRS will issue a CP21000 or CP2100A Notice if the payee’s name and TIN do not match IRS records. This notice indicates that…
Is there still time to claim employee retention credits?
Is there still time to claim employee retention credits for our church? Yes! The first expiration date for the credits is April 15, 2024, for any 2020 credits. 2021 credits can be claimed through April 15, 2025. That said, the IRS is still taking 6-12 months to process most credits, so the cash is not…
