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God’s Way – Stewardship. Budget and Staff Questions. Questions on Staff Issues. Housing Allowance for ministers How does it really work? W ho qualifies for it? Church Staff benefits Any suggestions for retirement plans for full time staff? Disability Benefits.

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Budget and staff questions

God’s Way – Stewardship

Budget and Staff Questions


Questions on staff issues
Questions on Staff Issues

  • Housing Allowance for ministers

    • How does it really work?

    • Who qualifies for it?

  • Church Staff benefits

  • Any suggestions for retirement plans for full time staff?

  • Disability Benefits


The old way the package
The Old Way — “The Package”

Package approach dangers:

  • A lump sum is misleading

  • Staff may pay unnecessary taxes

  • Staff person may choose cash over insurance and retirement protection

  • Church may incur a financial burden

“We’ll pay you a lump sum of $$ and you can divide it any way you want.”


Special tax rules for ministers
Special Tax Rules for Ministers

(Page 5)

  • Who is a minister for tax purposes?

  • How are ministers different fortax purposes?

  • Is a minister employed or self-employed?


Who is a minister for tax purposes
Who Is a Ministerfor Tax Purposes?

  • The IRS answer has nothing to dowith theology

  • Three important tax court cases:

    • Wingo — 1987

    • Knight — 1989

    • Reeder — 1993


Determining a minister for tax purposes
Determining a“Minister for Tax Purposes”

  • Is the person ordained, licensedor commissioned?

  • Does the person administer ordinances?

  • Does the person conductreligious worship?

  • Does the person have management responsibilities in the church?

  • Is the person considered to be a religious leader by the church?


How ministers are different for tax purposes
How Ministers AreDifferent for Tax Purposes

  • Eligibility for housing allowance

  • Self-employment status for Social Security

  • Exemption of wages from federal income tax withholding

  • Use of quarterly estimated tax payments or voluntary withholding

  • Possible exemption fromself-employment tax


Employee or self employed
Employee or Self-employed?

U.S. Tax Court (1994) seven-factor test:

  • The degree of control the employerhas over the details of the work

  • Which party invests in the facilitiesused for the work

  • The opportunity the worker has forprofit or loss


Employee or self employed1
Employee or Self-employed?

U.S. Tax Court (1994) seven-factor test:

  • Whether the employer has the right to discharge the worker

  • Whether the work is part of the employer’s regular business

  • The permanency of the relationship

  • The relationship the parties think theyare creating


Questions on staff issues1
Questions on Staff Issues

  • Housing Allowance for ministers

    • How does it really work?

    • Who qualifies for it?

  • Church Staff benefits

  • Any suggestions for retirement plans for full time staff?

  • Disability Benefits


Determine the needs
Determine the Needs

(Pages 6–7)

Identify the categories of financial support

  • Ministry-related expenses

  • Protection benefits

  • Personal income


Establish written financial support policies
Establish Written Financial Support Policies

(Pages 8–9)

Policies should cover at least four areas:

  • Ministry-related expenses

  • Employee benefits

  • Personal income

  • Other personnel policies


Provide for ministry related expenses
Provide for Ministry-Related Expenses

(Pages 10–12)

  • Budget adequately for expenses

  • Avoid payment of unnecessary taxes

  • Establish an AccountableReimbursement Plan


Church ministry related expenses
Church Ministry-Related Expenses

(Page 10)

  • Vehicle expenses

  • Work-related meetings,workshops, conferences

  • Ministry expenses

  • Continuing education

  • Hospitality expenses (policy regarding expenditures)


Key points to an accountable reimbursement plan
Key Points to an Accountable Reimbursement Plan

(Pages 11–12)

  • The expense must have abusiness purpose

  • Adequate substantiation of business expenses is required

  • Written record stating amount, date, location and business purpose

  • Receipts required for expenses over $75


Key points to an accountable reimbursement plan1
Key Points to an Accountable Reimbursement Plan

(Pages 11–12)

  • Expenses must be substantiated within 60 days

  • Excess advances must be returned within 120 days

  • Unused money cannot be given to an employee as income or bonus

  • Sample monthly expense report (page 10)


Key points to an accountable reimbursement plan2
Key Points to an Accountable Reimbursement Plan

(Pages 11–12)

  • Church reimburses business expenses from budgeted church funds

  • Caution: cannot be funded from salary

  • Sample reimbursement policy (page 12)

  • Employee issues when writing off business expenses


Employee issues when writing off business expenses
Employee Issues When Writing Off Business Expenses

  • Can only write off what is above 2% of adjusted gross income

  • Must have enough expenses to itemize and be above the standard deduction of $10,300

  • Minister must follow the “Deason Rule” and must reduce expenses by % of income that includes housing allowance


Deason rule
Deason Rule

Salary + housing total $40,000

Non-taxable housing $10,000

% of nondeductible $10,000/$40,000 = 25%

Assume eligible business expenses = $4,000

Eligible expenses of $4,000reduced by 25% = $3,000(then reduced by 2% of adjusted income)


Provide employee benefits
Provide Employee Benefits

(Pages 13–14)

  • Medical, life and disability coverage

  • Retirement plan contributions

  • Social Security assistance


Providing a benefits plan for ministers and church employees
Providing a Benefits Plan for Ministers and Church Employees

  • Demonstrates obedience tobiblical teaching

  • Saves taxes

  • Provides protection for the church

  • Extends employee service


Life medical and disability coverage personal and group
Life, Medical and Disability Coverage: Personal and Group

  • Term life insurance

  • Medical coverage

    • Eight PPO plan options

    • Includes prescription drug coverage

    • HSA-qualified plan available

  • Long and short-term disability coverage

  • Dental plans

  • Personal accident coverage

  • Long-term care education and insurance


Questions on staff issues2
Questions on Staff Issues

  • Housing Allowance for ministers

    • How does it really work?

    • Who qualifies for it?

  • Church Staff benefits

  • Any suggestions for retirement plans for full time staff?

  • Disability Benefits


The church retirement plan
The Church Retirement Plan

  • A 403(b) tax-sheltered retirement plan

  • For all Southern Baptist church employees who receive taxable income


The church retirement plan special features
The Church Retirement Plan — Special Features

(Page 14)

  • Contribution options

  • Tax advantages

  • Family protection

  • Matching contributions

  • Investment opportunities


The church retirement plan tax advantages
The Church Retirement Plan —Tax Advantages

  • Employer contributions not subject tocurrent income taxes

  • Participant contributions not subject to current income taxes

  • Investment fund earnings not subject to current taxes


The church retirement plan tax advantages1
The Church Retirement Plan —Tax Advantages

  • Retired ministers allowed to designate benefits as a tax-free housing allowance

  • Contributions by ordained ministers not subject to current Social Security taxes

  • Higher contribution limits than an IRA


The church retirement plan1
The Church Retirement Plan

Benefits of state convention contributions:

  • Protection benefits

    • Disability benefits up to$500 per month

    • Survivor benefit up to $100,000

  • Retirement benefits

    • Contributions up to $17.50 per month


The church retirement plan2
The Church Retirement Plan

State Convention Contributions

$105.00

Matching RetirementContributions

$1 for every $3 contributed

Maximum $17.50

Your Monthly Contribution Level

$52.50

Protection Benefits

Disability Income Benefit

Survivor Benefit

$1.00



You should carefully consider the investment objectives, risks, charges and expenses of GuideStone Funds before investing. For a copy of the prospectus with this and other information about the funds please call1-888-98-GUIDE (1-888-984-8433) or visit www.GuideStoneFunds.org to view or download a prospectus. You should read the prospectus carefully before investing.


Financial assistance for churches with a limited budget
Financial Assistance for Churches with a Limited Budget risks, charges and expenses of GuideStone Funds before investing. For a copy of the prospectus with this and other information about the funds please call

(Page 15)

Wyndolyn Royster HollifieldMission Church Assistance Fund

  • Annual church budget less than $75,000 a year

  • Up to $3,000 in matching contributions over five years are possible

  • Contact GuideStone Financial Resources 1-888-98-GUIDE (1-888-984-8433)for details


Social security assistance
Social Security Assistance risks, charges and expenses of GuideStone Funds before investing. For a copy of the prospectus with this and other information about the funds please call

(Page 15)

  • Assists ministers who pay self-employment tax

  • Offset is generally half the total self-employment tax

  • Reported as taxable income


Questions on staff issues3
Questions on Staff Issues risks, charges and expenses of GuideStone Funds before investing. For a copy of the prospectus with this and other information about the funds please call

  • Housing Allowance for ministers

    • How does it really work?

    • Who qualifies for it?

  • Church Staff benefits

  • Any suggestions for retirement plans for full time staff?

  • Disability Benefits and other issues


Housing allowance if you own or rent
Housing Allowance risks, charges and expenses of GuideStone Funds before investing. For a copy of the prospectus with this and other information about the funds please callIf You Own or Rent

  • The maximum amount eligible for exclusion is the lesser of:

    • The designated amount

    • The actual eligible expenses

    • The fair rental value of the home including furnishings plus utilities


Housing allowance if you live in a parsonage
Housing Allowance risks, charges and expenses of GuideStone Funds before investing. For a copy of the prospectus with this and other information about the funds please callIf You Live in a Parsonage

  • The maximum amount you can exclude isthe lesser of:

    • The designated amount

    • The actual eligible expenses


Housing allowance
Housing Allowance risks, charges and expenses of GuideStone Funds before investing. For a copy of the prospectus with this and other information about the funds please call

  • (Page 17)

    • For eligible ministers (IRS Code Section 107)

    • Designated in advance by the church

    • Non-taxable for federal income taxes only, subject to limits

    • Social Security taxes (SECA) payable on the fair rental value of a parsonage and on the housing allowance


Housing allowance actual eligible expenses
Housing Allowance risks, charges and expenses of GuideStone Funds before investing. For a copy of the prospectus with this and other information about the funds please callActual Eligible Expenses

  • Mortgage or rent

  • Utilities

  • Property taxes

  • Insurance

  • Furnishings

  • Repairs and improvements


How to designate a housing allowance
How to Designate a risks, charges and expenses of GuideStone Funds before investing. For a copy of the prospectus with this and other information about the funds please callHousing Allowance

  • (Pages 17–18)

    • Minister provides church an estimate of anticipated housing expenses (form on page 14)

    • Church officially designates and documents housing allowance in advance

    • Action recorded in church minutes and minister is notified (form on page 14)


How to designate a housing allowance1
How to Designate a risks, charges and expenses of GuideStone Funds before investing. For a copy of the prospectus with this and other information about the funds please callHousing Allowance

  • (Pages 17–18)

    • Housing allowance may be changed prospectively during the year

    • Minister is responsible for documenting expenses


Disability can we should we
Disability-Can We, Should We? risks, charges and expenses of GuideStone Funds before investing. For a copy of the prospectus with this and other information about the funds please call

  • Church can be in State Disability Insurance (SDI).

  • Church cannot have unemployment benefits

  • Churches are not involved in unemployment and cannot be

  • Federal Unemployment Tax Act (FUTA) Churches and religious organizations are not liable for FUTA tax. For further information on FUTA, see IRS Publication 517, Social Security and Other Information for Members of the Clergy and Religious Workers.


Are there any other payroll issues we need to be aware of
Are there any risks, charges and expenses of GuideStone Funds before investing. For a copy of the prospectus with this and other information about the funds please callother payroll issues we need to be aware of?

  • Ministerial income, reporting pastor's income on IRS form 941 (qterly) or 944 (yrly)

  • On the 941, you don't compute ministerial income on form subject to social security tax, but you do for non-ministerial income

  • Income to pastor includes: trips, love gifts, anniversary Sundays, Christmas, anything given to pastor-Consideration


Does the church need to file for our own tax exemption status
Does risks, charges and expenses of GuideStone Funds before investing. For a copy of the prospectus with this and other information about the funds please callthe Church need to file for our own tax exemption status?

  • Yes, I recommend it

  • If church members get audited, church name is in auditors book. More hassle if the church is under CSBC umbrella


T ax exemption status making tax free purchases
T risks, charges and expenses of GuideStone Funds before investing. For a copy of the prospectus with this and other information about the funds please callax exemption status: making tax-free purchases

  • (given that Alameda county has 9.75% sales tax, that would make a huge difference for us)

  • Tax Exemption comes through State Board of Equalization

  • Have to be approved, get Sellers Permit

  • Buy without sales tax, must charge sales tax on sales,

  • Pay SBE of CA.


Are there tax or reporting requirements for ancillary bank accounts
Are there tax risks, charges and expenses of GuideStone Funds before investing. For a copy of the prospectus with this and other information about the funds please callor reporting requirements for ancillary bank accounts ?

This is a big issue in churches across ethnicity

  • Who is controlling the money?

  • The church or the organization? Is it going through the church treasurer?

  • To get a contribution statement, funds must go through church books. Otherwise, no charitable contribution.


Penal code 326 6
Penal Code 326.6 risks, charges and expenses of GuideStone Funds before investing. For a copy of the prospectus with this and other information about the funds please call


Bingo and raffles pg 29
Bingo and Raffles (pg. 29) risks, charges and expenses of GuideStone Funds before investing. For a copy of the prospectus with this and other information about the funds please call

  • Charity bingo start-up costs range from a few hundred dollars to many thousands of dollars. Proper planning by directors is essential to insure profitable, cost-effective, and legal games. Every charity must comply with the local charity bingo licensing requirements before operating charity bingo games. Charities must account to local licensing authorities for all bingo proceeds.

  • Raffles conducted by nonprofit organizations for charitable purposes are lawful under California law which took effect in 2001. (Penal Code section 326.6.) Ninety percent of raffle revenue must be used for a charitable purpose or program. Charitable organizations must register with the Attorney General’s Registry of Charitable Trusts prior to conducting a raffle and must annually report the results of any raffles conducted. Registration and reporting forms may be obtained from the Registry of Charitable Trusts by mail or from the Charitable Trusts website.


Do we need to have an outside auditor if so why
Do we need to have an outside risks, charges and expenses of GuideStone Funds before investing. For a copy of the prospectus with this and other information about the funds please callauditor? If so, Why?

  • Yes

    What are some legal implications for not having an outside audit?

  • Nothing if your books are in order. NO hint of wrongdoing.

  • If you say you did an internal audit (illegal to say in CA) and there is wrongdoing with money, church can be sued. You did the audit. You are liable.


Do we need to pay taxes on any interest from savings and cd accounts
Do we need to pay taxes on any interest risks, charges and expenses of GuideStone Funds before investing. For a copy of the prospectus with this and other information about the funds please callfrom Savings and CD accounts?

  • No.


What is the best way to manage our money to plan for the future growth
What is the best way to manage our money to plan for the future growth?

  • You need an investment policy

  • The Guiding Churches through the Money Maze CD has such a policy


Investment Policy includes: future

  • Firmly establish procedures, policies and practices for making investment decisions and allowing for continuity when there is committee turnover.

  • Provide a way to monitor or measure an investment or an investment advisor as well as the selection thereof.

  • Provide disciple during the times when there might be emotional or volatile markets.

  • Provide a way to determine a committee’s risk profile and evaluate when changes need to be made in relation to current spending needs.

  • List transactions that the committee is prohibited from doing.

  • Describe the committee’s view and policy on ethical investing.

  • Describe the committee’s policy on self-dealing. This means not allowing committee members to take part in any investment decisions that would create a conflict of interest.


What questions can i answer for you

What Questions can future I answer for You?

Rod Wiltrout

CP Ministries &

Church Finance Specialist

California Southern Baptist Convention

559.256.0858

F: 559.229.2824

M: 559.287.7840

E: [email protected]

www.csbc.com

Insurance License # 0F75072


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