Hot Topics in Church, Christian Ministry and Personal Financial Management

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Hot Topics in Church, Christian Ministry and
Personal Financial Management

• By Corey A. Pfaffe, CPA, PhD September 2010

• Agenda
• 2010 payroll tax credit
• ObamaCare
• Loss of tax-exempt status
• Review IRS wage reporting
• Personal financial counseling

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Payroll Tax Credit for New Ministry Employees

• Has your ministry hired a non-ministerial
  employee since February 3, 2010, who had been
  unemployed during the 60-day period prior to his
  or her employment?
• If yes, the IRS may owe you money (62 for
  each 1,000 of wages).
• Its called the HIRE Act. Check out
  www.irs.gov and type Hire Act in the
  search window for more information.

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ObamaCare and Your Ministry

• The Small Business Health Care Tax Credit also
  applies to many small churches and Christian
  ministries
• Amount of credit For 2010-2013, 25 of insurance
  premiums paid by the ministry (increases to 50
  in 2014)
• Qualifications
• Fewer than 25 employees (FTE)
• Average annual wages per employee lt 50,000
• Ministry pays at least 50 of the health
  insurance costs
• Process claim the credit against payroll taxes
• Two Problems

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ObamaCare and Your Ministry

• Children under age 27 must be allowed to enroll
  in a parents employers health plan if that plan
  covers dependent children. Effective for plan
  years beginning on or after 9/23/2010.
• For 2011, employersincluding ministriesare
  required to report the value of health insurance
  coverage they provide employees on each
  employees annual Form W-2.

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ObamaCare and Your Ministry

• For 2014, a small ministry (lt50 full-time
  employees) will not be penalized for failing to
  provide minimum essential health coverage for its
  staff. However
• all applicable individuals are required to
  maintain minimum essential health care
  coverage. A new rule comes in existence
  Play-or-Pay.

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Form 990-N and Loss of Tax-exempt Status

• Most tax-exempt organizations whose annual gross
  receipts are normally 25,000 are required to
  file Form 990-N each year.
• If they fail to do so for 3 years in a row, they
  will automatically lose their tax-exempt status.
• Churches, and associations of churches that are
  recognized as such, are exempt from filing.
• The deadline has been extended until October 15,
  2010 (from the typical May 15, 2010 deadline).
• Go to www.irs.gov and type organizations at
  risk in the search window for more information.

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Employment Records and Reporting

• Churches and Christian organizations must meet
  virtually all of the records and reporting
  requirements stipulated for businesses.
• W-2 / W-3
• W-4 / I-9
• 1099-MISC / 1096
• 941 / 944
• FUTA / SUTA

Review
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Typical Ministers Annual Form W-2
Assumptions

• 35,000 Cash salary
• 30,000 Housing allowance designation
• (6,000) Ministers 403(b) plan elective
  deferral
• (5,000) Pastors optional federal and state
• income tax withholding
• 54,000 Net amount paid to minister

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Typical Ministers Annual Form W-2
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Resources for Counseling in Personal Finance
STRENGTHS A slap upside the head! Testimonies
STRENGTHS Bible training for all financial
levels
STRENGTHS Easy-to-read, Bible-rich teaching
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Resources for Counseling in Personal Finance