Generosity at Year’s End
Generosity at Year’s End The end of the calendar year is a time when donors often give generously to churches and other charities. Now is the time for churches to think about how this time of year can help with revenue. Many churches and other religious charities have joined in the global generosity movement known…
W-4 Withholding Calculator for Clergy
W-4 Withholding Calculator for Clergy According to IRS rules, income tax withholding for ministers is voluntary. If you do not complete a W-4 form, or if you indicate “exempt”, no federal tax will be withheld, and you should make quarterly estimated tax payments. Alternatively, you can complete Form W-4 so that your church withholds a…
Ministry Mileage
Ministry Mileage Documentation of expenses is vital to an acceptable accountable reimbursement plan. Pre-Covid, ministry mileage driven is generally the minister’s greatest expense. Some ministers have contended that every mile they travel is in the furtherance of their ministry – and thus reimbursable. Their contention is based upon the fact that they never stop being a…
Retirement 403(b) Plans for Ministers
Retirement 403(b) Plans for Ministers While it is true that ministers, and other church employees, may earn less than those performing similar jobs requiring similar skills in the secular world, there are unique tax advantages that can help offset the compensation differences. One of the greatest advantages for church workers is the 403(b) retirement plan….
Is it Vacation or Paid Time Off?
Is it Vacation or Paid Time Off? Traditionally, churches offered separate paid time off benefits to employees, such as paid vacation, sick leave, and personal days. However, in the past decade, many churches have moved to a more flexible Paid Time Off or “PTO” benefit that incorporates all policies into one all-inclusive PTO plan. The…
Expense Reimbursement Policy
Expense Reimbursement Policy The Church should set up a written Expense Reimbursement Policy to cover all reasonable, ministry-related expenses. The policy should outline any item that may be considered a qualified expense for the church. Any expense that does not fall within your guidelines must be approved by the appropriate supervisor before the expense is incurred….
Understanding Form 941
Understanding Form 941 Churches file Form 941 four times a year to report income taxes, social security tax, or Medicare tax withheld from employees’ paychecks. As the IRS explains: “Federal law requires you, as an employer, to withhold certain taxes from your employees’ pay. Each time you pay wages, you must withhold — or…
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…
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…