Your Minister: Will He Be Able to Retire?
Is your minister saving enough money for his retirement years? Depending on how many years there are before he retires, he will need to accumulate hundreds of thousands of dollars in investments if he hopes to retire with an income that will permit him to maintain even a moderate lifestyle. There are a variety of retirement plans available to ministers: IRA, Roth IRA, TSA, SEP, 401k, Christian Church Pension Plan, plus many others. Which method of saving for retirement is best is not easily answered. Contact us about how you can help your minister start saving now for his retirement years. We can help.
Your Minister’s Pay Package. Does it comply with tax laws?
Does it comply with current tax laws? Complexity of current tax laws makes it extremely important to properly arrange the minister’s compensation package. If various elements of the compensation package are not structured to comply with tax law requirements, unnecessary taxes may be owed by the minister or underpayment of taxes can result. Poor stewardship or underpaying taxes are both poor options. The minister’s housing allowance deduction is often substantially less than the maximum allowed by tax laws. If so, Federal, State, and Local income taxes may be overpaid. Ministerial vehicle and other business expenses, unless reimbursed under an IRS “accountable plan”, will be partially nondeductible due to lack of compliance with current tax law requirements. Contact us for details about our Compensation Package Planning services. We can help.
Church Treasurer: Could You Use Some Help?
Could you use some help with the church payroll? Many church treasurers find that handling the church payroll requires a great deal of time. Complying with complex tax regulations can cause anxiety and frustration. In view of this need, we now offer complete payroll services. Most payroll service firms are not familiar with the different requirements of church payrolls. Since ministers are not subject to FICA/Medicare tax withholding, their paycheck must be calculated differently. Tax Sheltered Annuities (retirement funds), housing allowances and employee benefits are areas that need special handling. We prepare W2’s, W3’s, Forms 941, state and local payroll reports. Calculating the amounts and due dates of Federal, state and local tax deposits is included in our payroll service. Each payroll service is designed to meet the specific needs of the employing congregation. Contact us for details about our Payroll Services. We can help.
Taxes & the Preacher
Preacher, are you paying more taxes than you should? As a minister, it is extremely important how your compensation package is arranged. Depending on the way your pay package is structured, you may be paying $500, $700 or even $1,000 per year in unnecessary taxes! Does your church reimburse all your ministry-related expenses? Mileage? Books? Conferences, conventions? Education? Equipment? Other ministry expenses? If your expenses are reimbursed, does your expense plan meet all the IRS requirements for an accountable expense reimbursement plan as listed in IRS Publication 517?
Could You Be Causing Your Minister to Pay Unnecessary Taxes?
If your minister’s compensation package is not structured properly, he may be paying unnecessary taxes or underpaying his taxes. Poor stewardship or underpaying taxes are poor options. Vehicle business mileage, business long distance, books, periodicals, conventions, seminars, education, overnight travel, etc., are necessary for the minister to accomplish his mission of winning the lost and caring for the flock. Moneys spent for these items represent a significant portion of the average compensation package.
Ministerial Pay
No one else is paid quite like ministers. This is why even experienced accountants may make mistakes in handling minister’s compensation. Ministers are dual status employees—employees for income tax purposes, but self-employed for Social Security and Medicare taxes. The church treasurer is often a volunteer who may not be familiar with the numerous federal, state, and local regulations related to ministers and other church employees. As a result, many errors occur in reporting ministerial compensation.
The W-2 Form: Should a Minister Receive a w2?
The vast majority of ministers are actually employees of the church. For many years the I.R.S. has considered most ministers to be employees of the church. None of the new tax laws have changed I.R.S.’ intent to have ministers treated as employees of the church. A properly structured compensation package and accountable expense reimbursement plan will reduce income and Social Security taxes to the legal minimum. Withholding of taxes (ministers filing as employees) is still on a VOLUNTARY basis. If the church and the minister both want to do it, income taxes can be withheld. The law PERMITS but does NOT REQUIRE withholding for ministers. If taxes are withheld, an amount equal to the Social Security tax (SECA) can and should be withheld, but it must be listed as ‘federal income taxes withheld” FICA and MEDICARE taxes should NOT be withheld from a minister’s paycheck. If you need help with handling payroll, we can help.
Minister’s Taxes
Preacher, are you paying more taxes than you should? As a minister, it is extremely important how your compensation package is arranged. Depending on the way your pay package is structured, you may be paying $500, $700 or even $1,000 per year in unnecessary taxes! Does your church reimburse all your ministry-related expenses? Mileage? Books? Conferences, conventions? Education? Equipment? Other ministry expenses?