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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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Hot topics in church christian ministry and personal financial management

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


Payroll tax credit for new ministry employees
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).

  • It’s called the HIRE Act. Check out www.irs.gov and type “Hire Act” in the search window for more information.


Obamacare and your ministry
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 < $50,000

    • Ministry pays at least 50% of the health insurance costs

  • Process: claim the credit against payroll taxes

  • Two Problems …


Obamacare and your ministry1
ObamaCare and Your Ministry

  • Children under age 27 must be allowed to enroll in a parent’s employer’s health plan if that plan covers dependent children. Effective for plan years beginning on or after 9/23/2010.

  • For 2011, employers—including ministries—are required to report the “value of health insurance coverage they provide employees on each employee’s annual Form W-2.”


Obamacare and your ministry2
ObamaCare and Your Ministry

  • For 2014, a small ministry (<50 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.


Form 990 n and loss of tax exempt status
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.


Employment records and reporting
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


Typical minister s annual form w 2
Typical Minister’s Annual Form W-2

Assumptions

$35,000 Cash salary

30,000 Housing allowance designation

(6,000) Minister’s 403(b) plan elective deferral

(5,000) Pastor’s optional federal and state

income tax withholding

$54,000 Net amount paid to minister



Resources for counseling in personal finance
Resources for Counseling in Personal Finance

STRENGTHS: Bible training for all financial levels

STRENGTHS: A slap upside the head! Testimonies

STRENGTHS: Easy-to-read, Bible-rich teaching



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