Legal with God and Man . . . Some Say No Way!
A few years ago a church of 300 members wanted to bless their pastor in a way that was meaningful. He had suffered a few financial setbacks recently and many in the church wanted to do something to bless him. The church treasurer was assigned the task of discovering what the church could do legally and what was the best way to do it so that…
Read Full Article | CommentsIRS Ready to Take More From Churches
When the Small Business Jobs Act was signed into law, Section 2102 amended the tax code and more than doubled the penalties for 1099 forms. Your church can now be penalized for filing it late, mismatching a social security number, or submitting it with a typo. The problem with this new change in the law is that if you submit a 1099 form…
Read Full Article | Comments7 Year End Statement Rules You Don't Know
It happens each year. Churches everywhere are trying to make sure they send out tax-deductible contribution statements to their donors by January 31st. To help ensure that the statements you send out are very accurate, let me share with you some rules for doing it right. Some of the rules you may already know, but some I guarantee…
Read Full Article | CommentsLost Tithe Records - The Must Know Plan to Recovery
It happens every year. Churches of all sizes and backgrounds lose their tithe and offering records. The most common way this happens is through a church computer hard drive crash. No matter how many times we hear that consistently backing up records is the best practice, how many actually do it? There are many free online…
Read Full Article | CommentsNew IRS Rules to Watch in 2012
The legal landscape for churches and ministries is one that is filled with many pitfalls. Over the last twenty years, Congress and the IRS have become very active in watching the activities of churches, ministries and nonprofits. It led to the enactment of section 4958, and the creation of the Exempt Organizations Executive Compensation…
Read Full Article | CommentsGot Questions? Don't Ask the IRS
The following is a fact-based story relying on the court case; David Michael Maser v. Commissioner. When Pastor Tom received a letter from the IRS stating that his church owed $3,000.00 due to a clerical error on the church's 941 tax return, he was flabbergasted. The letter stated that he had 90 days to appeal. He decided to call the…
Read Full Article | CommentsDoes the IRS Treat an iPad Like a Cell Phone?
Back in the days when VCR's and 8-track tapes were a blessing, cell phones were rare and expensive. They were so expensive that the Motorola DynaTec phone cost a whopping $3,500. Naturally, wealthy executives who could not only afford the cost of purchasing one, but also the phone bill, which could run in the thousands of dollars per month,…
Read Full Article | CommentsIf Not This Year, When?
I was driving back to the church office after visiting a family in the countryside of a community known as Montura Ranch Estates. A scenic South Florida drive, with cattle pastures of green grass to my right-hand side, and miles upon miles of orange groves to my left, it was on this lonely road that I had a remarkable encounter with the Lord. …
Read Full Article | CommentsYou Need to Makes Changes To Your Housing Allowance
A Tale of Two Pastors—Part 6 Chances are, after you read this you will likely need to make changes to your housing allowance. This year, ministers by the thousands will have deficient or illegal housing allowance designations that will cause them to pay too much in taxes. I will make my point by sharing the story of two pastors. Pastor Monique…
Read Full Article | CommentsThe Perfect Church Set Up, Part 2
In part 1 of this series, I wrote that over 1,000 churches per month face litigation. With that trend currently rising, we must be diligent to heed the warning that Jesus gave His disciples in the first Christian outreach in history. Jesus warned His disciples that they were being sent like sheep among wolves and that they needed to be "wise…
Read Full Article | CommentsEnd Strong to Start Strong
As the end of the year approaches, pastors and church administrators need to plan how to close out 2011 with a strong finish for the church. How well you gather information now dictates how you start the New Year. There is nothing better and more promising than getting a good start. Each year churches make commitments to get the New…
Read Full Article | CommentsThe IRS May Say That You Are On Salary At the Church, Even If You Believe You Are Not
Because of the nature of our tax system, while most churches are focusing on outreach and other ministry functions of the church, many pastors and church treasurers fail to think about on taxes. Unfortunately, they miss the mark and often times under report the pastor's income.This happens because there are many pastors that are not on salary…
Read Full Article | CommentsAre You Worthy of 5 Talents?
Every Year Thousands of Churches Lose Assets Unnecessarily! Starting a ministry is one thing, but managing a ministry is a completely different matter! It is my experience that many ministries have a much more difficult time managing their ministries than they do starting them. Don't you know that the call to preach is also the call to stewardship…
Read Full Article | CommentsMinister Income Mistakes That Blow Me Away
I never ceased to be blown away at the number of things that ministers do incorrectly when it comes to properly reporting income on their tax returns. As a fellow minister, I understand why that happens. The tax laws that regulate churches and ministers are very complex and filled with pitfalls. In today’s ever-changing, legal…
Read Full Article | CommentsHow to Know What is Taxable Income for a Minister
Many churches pay certain allowances as a benefit to their minister, such as a car allowance, light bills, water bills and much more. Moreover, churches all across America take up love offerings, love tokens and many types of gifts for their pastors. Are they taxable? Should the be reported? Under the law, most of these allowances…
Read Full Article | CommentsChurch Momentum Killers
Every pastor struggles with keeping momentum. It is a fact of life that momentum comes and goes. However, what I have discovered is that those who succeed the most are the ones who purposefully and endlessly struggle to keep momentum on their side. I remember the very first time I felt that I lost momentum. I made a series of…
Read Full Article | CommentsHave You Heard of the Housing Allowance Retirement Rule?
The vast majority of churches across America are not aware that a church can create a retirement (pension-like) plan that allows a minster to receive tax-free income after he/she resigns or retires from the church. This is a rule that is defined in IRS Revenue Ruling 63-156. In essence, a church takes a portion of a minister's pay each week,…
Read Full Article | CommentsDoes Your Church Know the 250 Dollar Rule?
Pastor Jones' Church and Tom It was a beautiful spring day in mid April. The Sunday service the day before marked the first time that Pastor Jones church had 175 people in attendance. On Monday, he walked into his office to see a note from Tom requesting a meeting with him. Pastor Jones was glad to see Tom's note. He and Tom…
Read Full Article | CommentsNo Minutes? Then No Board Meeting!
Does Your Ministry Keep Minutes? I recently had a conversation with an administrator who had just joined the staff of his church. He mentioned that in the three months he had been there, he had found no trace of any board meeting records for the last decade. He asked what could happen if he could not find any minutes. My reply was…
Read Full Article | CommentsPastor Duped Into Tax Fraud Scam Pleads Guilty
It was late in the afternoon on a Monday morning in July and Pastor Tom was sweating bullets over the offering on Sunday. "No matter how hard I try to prepare myself, summers are always tough on me", said the pastor. "Attendance is up and down and finances always hit rock bottom . . . God, I need a miracle." He shut off the light in…
Read Full Article | CommentsFive Awesome Housing Allowance Tips to Keep You Out of Trouble
It is not news to anyone that a minister of the gospel can designate some or all of his/her salary from the church as a housing allowance and then exclude it from gross income so that, in essence, he/she receives it tax-free. Though this law has been in the books since 1921, many churches still largely misunderstand it. This is mostly due…
Read Full Article | CommentsSurprise of the Year: 1000's of Ministries Lose Tax Exemption
Many Americans that made tax deductible contributions after May 15th, 2010 will get a big surprise when they find out that those contributions were in fact not tax deductible. This news comes to them because on June 8th, 2011, the IRS was forced by law to automatically revoke the tax exempt status of 275,000 organizations effective as of May 15th,…
Read Full Article | CommentsLove Offerings--When They Are Taxable and When They Are Not
The dialogue that surrounds the taxability of love offerings is similar to a pendulum swinging from one extreme to the other. There are some that believe all love offerings are tax free, others that believe a love offering can never be tax free, and a whole group of folks that have no idea. There really is a lot of confusion over this topic--to…
Read Full Article | CommentsA Fresh Perspective On Starting a Church
It was Sunday afternoon and the service had long since come to a close. Sixty people came to the service that morning. For pastor Tom, it should have been a moment to celebrate. However, there he was sitting at the foot of the altar with tears streaming down his face. He could not shake the feeling. He felt lonely and afraid. …
Read Full Article | CommentsFacts and Myths about Church and Ministry Incorporation
I received a call from very upset Mr. X. (For the sake of anonymity, let's just call him Mr. X.) He was insisting that I shut down my ministry and repent for teaching people the importance of church incorporation. He said that when a church incorporates it deposes Jesus Christ from His rightful position as Head over His own Body. I must admit, he…
Read Full Article | CommentsWhy You Should Get 501(c)(3) Status Before the Year Ends
When it comes to getting good information on the topic of 501(c)(3) status for churches and ministries, the Internet leads the way in creating confusion. It seems that just about everyone has an opinion that is either in favor or opposition to it. One would imagine with so much written about the subject that finding good information would…
Read Full Article | CommentsThe Latest on Churches Filing Form 1099-Misc.
On March 23, 2010 President Obama signed the Patient Protection and Affordable Care Act. The now infamous healthcare act amended section 6041 to increase the 1099-misc reporting requirement on all businesses, churches and ministries. For example, if your church goes to buy $600.00 of office supplies from Office Depot, it would have to issue…
Read Full Article | CommentsCan your church get a $2,500.00 refund for providing health insurance?
One of the goals of the health care act is to help small employers afford the cost of providing health insurance to their employees. The health care act gives a refundable tax credit of 25% of the cost of health care insurance that the church pays for its employees. In order for the church to qualify for the tax credit, it has to meet…
Read Full Article | CommentsMy Church is too Small
Two years after the start of our church, I attended a very large youth conference during which the speaker, on the last day, wanted to honor all the senior pastors that were present. Requesting every pastor to stand, applause filled the room while they honored us for our labor and dedication to the work. What they did not know was that I…
Read Full Article | CommentsOne Lost Paper Cost Pastor $309,000.00
" I know I filed it . . . I know I did!" said Pastor John Hunter. "Where is it?" was the instant reply from the agent that sat across the desk. "I don't know, but I am sure that I will find it." What you have just read is a conversation that will become common if the IRS increases the number of pastors that they audit. For Pastor…
Read Full Article | CommentsThe Race is Long; Avoid Burnout
It had only been a year and a half from the day I started my church and already, I was feeling burned out. I thought it would be bigger and better established. I took it for granted that the congregation would be more dedicated and involved in outreach efforts. All of my energy was quickly dying and I did not know how to get it back. …
Read Full Article | CommentsIs Your Ministry on an IRS List?
There are two lists that you need to know about that have been compiled by the IRS. The first list, known as Publication 78, is one you want to be on, while the second; known as the Nonfiler Automatic Revocation List, is one you never want to be a part of. On which list is your ministry? Let me give you a quick rundown of each list. List…
Read Full Article | CommentsRecording Your Own Crimes? Churches do it Every Week
Many pastors spend hours and hours crafting everything that goes into their sermons. They think of their points, stories and verses. But one thing few pastors think about...is that they may be recording their crimes. Have you ever thought about the actual content in your recorded worship services and sermons? What exactly is in your archive…
Read Full Article | CommentsReporting the Housing Allowance on the Tax Return
Far beyond that of any other year, this year I have spent more time talking to pastors, treasurers, CFO's and administrators about the housing allowance. What is the most common question I have gotten? "How do you report the housing allowance on the minister's tax return?" My answer is usually, "That depends." Unfortunately, reporting…
Read Full Article | CommentsBig Vision, Small Checking Account
How Big Are Your Dreams? Sometimes, the vision of a pastor's heart is greater than what the church's finances can provide. A big vision is wonderful, yet when you add a lack of finances to the mix it can lead to a discouraged heart. If you ever become discouraged in this way, I challenge you to assess the condition of your heart! Scripture…
Read Full Article | CommentsThe Legal Ramifications of Same-Sex Marriage on the Church
Same-sex marriage is a divisive topic in America. I believe that it is a struggle for the mindset of American culture. In the near future, an ultimate showdown for the Church will occur because the passage of legislation that makes same-sex marriage a constitutionally protected right will place a very serious burden on faith based organizations…
Read Full Article | Comments1099 Law May Change and Bring Relief to Churches
In April of 2010, I wrote an article about a new law that made it tougher on churches. The law mandates all churches, ministries, non-profit organizations and businesses to issue a 1099-Misc form to any and all people, businesses and corporations for payments of $600.00 for services, exchange for property or gross proceeds. This law…
Read Full Article | CommentsThree Common Mistakes Made When Launching a Church
The other day I was talking with a pastor from Chicago who was experiencing some personal trouble with his tax return because he reported his housing allowance incorrectly. The IRS had reviewed his taxes and asked him to substantiate the reported housing allowance on his schedule C. Church Issued a 1099 When the pastor went to do his taxes…
Read Full Article | Comments1st Quarter 2011 Church Tax Calendar
Every year in January, our office gets tons of phone calls from pastors and leaders asking about tax forms and what needs to be filed in January. To that effect, we put together a tax calendar to educate and guide you in the process. This calendar is specific for churches and ministries. We hope that it helps you in your endeavors…
Read Full Article | CommentsHousing Allowance May Cease to Exist
Once Again, the Housing Allowance is Under Fire. On October 15th, 2009, the Freedom From Religion Foundation and 21 of its members filed a lawsuit in California's Eastern District Court in Sacramento, complaining that the Minister's Housing Allowance was unconstitutional because it gave a preferential tax benefit to ministers. They claim that…
Read Full Article | CommentsHow tall are the ceilings at your church?
A couple of years ago I was having lunch with a staff member of a church with whom I was well acquainted. We sat down at our table and reminisced while we placed our orders for some appetizers. As the conversation continued to develop, I detected frustration in his voice when on two occasions he made mention of the decision making process…
Read Full Article | CommentsConfessions of A Stressed Out Church Bookkeeper
Based on a true story! Like many start-up churches, Pastor Johnson's church did not have an expert bookkeeper; but it did have Pastor Johnson's wife, who labored faithfully each week at the task of keeping the books, ensuring she did her best job in an area that, well...frankly, left her feeling quite inadequate! There were some weeks she wondered…
Read Full Article | CommentsTax Forms to Prepare in January
January is often times busier than December! January is the time of year that many leaders make an effort to keep a resolution of better managing their ministries. Though it be a noble resolution, January may be the most challenging month of the year to keep such goals. It is the month that the ministry must prepare and file tax and informational…
Read Full Article | CommentsMinistry is Not So Simple Anymore
The complexity of ministry Have you noticed how complex the ministry has become? Very little about the ministry is simple any more. Long past are the days when a pastor was just a pastor. Today pastors are not only preachers, they are leaders of corporations, required to make good business decisions on behalf of the church. This is a tall order for…
Read Full Article | CommentsAn Important Question About Your Church Website
The world wide web is where most people begin shopping In conversation with my realtor one day, he mentioned that over 75% of people now do their initial real estate shopping online. In the same way, a vast majority of individuals who are seeking for a church begin their search online. The question is no longer, "Does your church have a…
Read Full Article | CommentsCredit Card Woes at the Church
Taking a church from 150 members to 2000 members In 1998, Pastor Russell Hodgins took the helm of a debt ridden, 150-member church. Armed with not more than a vision and the motto "Love Jesus and love people" he persevered through the lean years until the church turned the corner. It was not too long before the congregation realized that…
Read Full Article | CommentsWhy The IRS Prosecutes Some Pastors and Not Others, Part 2
Should I be personally concerned? As you read yesterday's article, you may have had some alarming thoughts cross your mind. I have had conversations with many church treasurers and CFO's that describe the way money is handled, and at times I cringe. The IRS focused on Pastor's Jinwright and Clarke for prosecution. They could have just…
Read Full Article | CommentsWhy The IRS Prosecutes Some Pastors and Not Others
Pastor, Church and IRS In the last year, I have written about two pastors that have been prosecuted by the IRS. One pastor, Gregory Louis Clarke, was sentenced to 21 months in prison for assuming that the love offerings he received from his church were gifts to him. The other, pastor Anthony L. Jinwright, was convicted of fraud and tax evasion…
Read Full Article | CommentsHow a Church Debit Card Can Cause Trouble
The convenience of debit cards "It's convenient and much easier than writing a check," were the words one pastor said as he swiped his card at a Christian bookstore. He was buying research material for a sermon series he was doing on marriage and family. He purchased several books and one set of DVD teachings from a popular Christian speaker. …
Read Full Article | CommentsCan a Pastor be Guilty of Fraud for Selling His Own Sermons to a Publisher?
A conflict may exist between you and your church Many pastors are not aware that because of the United States Copyright Act, when a minister preaches a sermon, the sermon belongs to the church. There are two reasons why, as listed below. The United States Copyright Act vests ownership of a sermon with the church because it was created and…
Read Full Article | CommentsLove Offerings and Bad Church Books Lands One Pastor and His Wife In Jail
The pain of change Though Bishop Anthony L. Jinwright wanted to make sure that his church and finances were right, he was reluctant to make the changes needed in order to get in compliance with state and federal law because he dreaded the period of discomfort those changes would bring. He failed to report reimbursements, seed offerings and his…
Read Full Article | CommentsExcellence in Ministry . . . What is It?
I get the privilege of working with hundreds of churches and ministries every year. With that privilege comes the responsibility of looking into their books, records, policies, and procedures to analyze the good, the bad and the ugly. In my own estimation, the majority of churches fall into the bad and ugly when it comes to their IRS…
Read Full Article | CommentsCalled by God to Start a Church in Port St. Lucie, Florida . . . Now What?
How does one start? When Pastor Alvin heard from the Lord to start a church, he responded with a strong yes, but he wondered how it would be possible if both he and his wife had full time jobs. Where would the time come in order to launch the church? Where would they start? An even bigger question was, "How would they start?" After…
Read Full Article | CommentsEstablishing a Scholarship Fund for Graduating Seniors
Investing in the Lives of Young Adults In what significant way could your church impact the life of a young man or woman who is graduating from high school-a way that would help solidify the future he or she aspires to have? In 2002, our church in Florida began a scholarship program in order to do that very thing-to help some of the graduating seniors…
Read Full Article | CommentsThe Federal Government Wants to Give Your Church Money
A Law that may actually help your church It seems that all I have been writing about lately is bad news! For a change, there is some good news for churches and ministries! On March 18th, 2010 a law was passed that may make it the best time ever for the church to hire the pastor or another employee. The Hiring Incentives to Restore…
Read Full Article | CommentsA New IRS Law That Makes It Tougher on Churches
An important update has been issued on this article. Every Church in America is required to issue and file 1099-Misc forms. The new changes to the way 1099 forms are issued will cause churches and ministries to come under intense and burdensome regulations. The 2010 Health Care Act under subsection 9006(b)(1) amended old rules and it now mandates all…
Read Full Article | CommentsWhat Soccer Taught Me About the Business Side of Church
Getting your church in order may feel like learning something new. After all, you were called to be a minister not a bookkeeper. That may be true but part of being a minister is being an open letter (books). Your life (which consists of your church's books) needs to be beyond reproach. How can you preach a message of godliness…
Read Full Article | CommentsBecome Ordained Before the Year Ends!
Do not let the Christmas season distract you from time sensitive tax issues! This time of year, pastors and leaders get caught up in the wonderful Christmas season and enjoy weeks of celebrations, plays and time with family. I personally love Christmas and make every effort to create precious memories with my wife and children. I love to…
Read Full Article | CommentsHow to Go on Salary at the Church or Ministry!
Why Receive a Salary? In my 20 years of ministry experience, I have come to the conclusion that churches and ministries that have pastors and leaders on full time salary are much more effective in their outreach than pastors who are working full time jobs in other places. The dilemma we run into when our pastors are working outside jobs is that…
Read Full Article | CommentsCommon Mistakes Made By Ministers that May Take their Churches Down!, Part 3!
A Three-Part Series on Common Mistakes Made by Ministers! Welcome to part three of our series titled "Common Mistakes Made By Ministers." Congress has tightened its grip on the legislation that governs the way nonprofits, including churches and ministries, handle their finances. This gives us good reason to understand the new rules and regulations…
Read Full Article | CommentsCommon Mistakes Made By Ministers, Part 2!
A Three-Part Series on Common Mistakes Made by Ministers! Last week I wrote on two common mistakes made by ministers. Most ministers fail to set up the housing allowance and self employment tax exemption correctly and in a timely manner. They believe that because they are not drawing a salary at the church, they do not need the allowance…
Read Full Article | CommentsCommon Mistakes Made By Ministers, Part 1!
I am not on salary at my church, should I still set up a housing allowance and opt out of self employment tax? This is the time of year when ministers begin to think about going on salary at the church. They wonder about setting up a housing allowance and opting out of self employment tax. When it comes to tax compliance, the most common mistake I…
Read Full Article | CommentsIRS Requires 30% Withholding on Love offerings to Foreign Guest Speakers!
Churches Must Withhold 30% on Love Offerings Paid to Foreign Guest Speakers! Most churches support missions and often times have foreign nationals speak at their church. Whether it be a missions conference or a special service, the love offering, or honorarium paid to the foreign guest speaker, is subject to a Non-Resident Alien withholding of…
Read Full Article | CommentsSpecial Tax Requirements for California Churches and Ministries!
The state of California has been increasing its tax compliance efforts in an attempt to raise tax revenues. Because of these increased efforts by the state, we urge churches in California to become educated about the specific tax rules and registrations that are unique to California. Below is a quick list. Franchise Tax: Every church or…
Read Full Article | CommentsIRS Loses Against Church!
Church In Minnesota Avoids an Audit ... At Least For Now! In February of 2009, the IRS suffered a setback in its ability to audit churches. That setback came as a result of two federal court rulings which prohibited the IRS from auditing a church in Minneapolis, Minnesota. In 2007, the IRS began an inquiry into the church's records. …
Read Full Article | Comments5 Things to Consider Before the Year Ends!
1. The $250.00 Dollar Rule for Tax Deductions Did you know that there are special rules issued in IRC 170 that specifically delegate how your church or ministry should treat donations that exceed $250.00 in value? One of the greatest blessings to your church are members who tithe and give offerings faithfully. Your church depends…
Read Full Article | CommentsCan Our Church Own a Business?
I recently received an email from one of our readers asking if their church could own a business. Someone wanted to donate a business to the church, but the reader didn't know if the church was even allowed to own and operate a business that would bring the church income. In short, the answer is yes. The church is allowed to own a business…
Read Full Article | CommentsWhy I Started a New Non Profit Organization (CDC)
Outreach! Last week's article, "The Biggest Part of Receiving a Blessing is Being Ready When it Comes!," received quite a response from our readers. Many of you wanted to know why we incorporated our outreach as a separate, nonprofit corporation. Simply put, our old ideas were not working. My wife and I had big dreams for our outreach ministry. We…
Read Full Article | CommentsLegislation that Makes it Mandatory for You Purchase Health Insurance
Yesterday, the House of Representatives agreed on a 1,000 page plan that completely overrides health care as we know it. The new Bill will force every American to buy health insurance. If insurance is not purchased, Americans will have to pay fines worth 2.5% of their income. Additionally, employers will be forced to provide health…
Read Full Article | CommentsGet Ready for an IRS Audit!
What are the chances of an IRS audit against my ministry? Good question! Historically, chances have been low...maybe too low. It is a well documented fact that more than 85% of churches have compliance issues. Issues that need resolution. Now that the post-denominational era has been well established, and the majority of church…
Read Full Article | CommentsThe Least of These; A Thorn in My Flesh
The Need for Benevolence! In the late 1990's I was pastor over a small church in South Florida. We were located in a small agricultural town; population 5,000. Most members of the church were of Mexican descent and many of them came from broken homes and had poor educations. Despite the adversity, our church did well. We had grown from 25 members…
Read Full Article | CommentsCompensation for past years!
Last week we briefly covered the issue of compensating pastors for previous, un-paid years of service, and that it is perfectly legal to do so. This stems from a court case involving a church who paid a pastor and his [missionary] son in lump sums for the years of work they performed for the church without pay. The church decided to sell its building…
Read Full Article | CommentsOur church has made a few mistakes. What can we do about them?
What to do about past mistakes! Many churches that we serve have made mistakes in the the past and are wondering what they can do to correct them. These errors range from years worth of unreported love offerings, to missing W-9's and 1099-Misc forms, to lost board meeting minutes. Some mistakes, like misplaced W-9's, can easiliy be fixed, while…
Read Full Article | CommentsChurch Loses Property Over Bake Sales!
Beth-El, an African-American church in the Chicago neighborhood of Englewood, purchased some property on 63rd Street in 1976. The church rehabilitated the property and established itself there. During the years that the church quietly enjoyed its existence on the property, the community improved and the church continued to grow. However, the county…
Read Full Article | CommentsAlabama Pastor Goes to Prison for Love Offerings!
A pastor in Alabama, Gregory Louis Clarke, was sentenced to 21 months in prison for assuming that the love offerings he received from his church were gifts to him. Over a period of several years he received many love offerings from the church for purposes such as car allowances, appreciation gifts and other offerings that he did not consider as normal…
Read Full Article | CommentsCan a Church Get in Trouble for Not Properly Handling Designated Offerings?
Often times, churches and ministries receive designated offerings for building campaigns, outreach programs or benevolence. You may be surprised to know that a large number of churches have trouble properly handling designated offerings. The main reason for this problem is that not many know what the proper procedure is for handling designated…
Read Full Article | CommentsCan Pastors Deduct Tithes as Business Expenses?
Pastors all across America work hard and are underpaid. Statistics show that the average pastor is severely underpaid; more than in any other profession. Many pastors have chosen not to opt out of having to pay social security taxes. Social security tax (otherwise known as self employment tax) is 15.3% of the pastor's income. This means that a pastor…
Read Full Article | CommentsEmbezzlement While Counting Tithes and Offerings!
Counting the church tithes and offerings is where most embezzlement of church occurs. Establishing a procedure of checks and balances is the only way to prevent it from happening. Regrettably, most pastors, though they think about it, never take the necessary measures to implement a procedure prevents this crime from happening. A church in Raleigh,…
Read Full Article | CommentsAll Ministers on Salary at Church Must Get a W-2 by January 31st
Should the Pastor Get a W-2 or 1099-Misc? Some churches give their pastors and other ministers a 1099-Misc each year for their taxes. This is not correct. A pastor must be given a W-2. Under the latest treasury regulations, a pastor is described as an employee for federal income tax purposes but as self employed for social security tax purposes. …
Read Full Article | CommentsCreating a W-2 is not an option!
Under the law, a church must issue a W-2 form to the pastor and any other employee of the church. A 1099-Misc is not the legal way to do it. Most churches do not issue a W-2 and instead give a 1099-misc to the pastor. This is not correct and greatly increases the chances of an audit of the pastor's tax return and also increases the chances of the church…
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