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December 1, 2011

December Tax Tip: Update Staff W-4s Now

New laws, life changes have likely affected many.

by Richard R. Hammar


December is a good time to check with all nonminister church employees to see if they need to file a new W-4 form with the church. The W-4 form is used by employees to report withholding allowances. This information will determine how much income tax the church withholds from the wages of a nonminister employee. The important point is this--W-4 forms often become obsolete because of changes in an employee's circumstances, but the employee fails to submit a new form to the church. This can result in withholding that is significantly above or below the actual tax liability.

There are many reasons why an employee's W-4 may be inaccurate, including the birth of a child, a pay raise, or significant medical expenses. These same considerations apply to ministers who have elected voluntary withholding of their taxes.

Additional Tip: The tax cuts passed by Congress in recent years have reduced taxes for most Americans, and this is another reason why some church employees will want to submit a new W-4 form.

Richard R. Hammar is an attorney, CPA, and author specializing in legal and tax issues for churches and clergy. He is the author of the 2012 Church and Clergy Tax Guide.

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Posted by Matt Branaugh on December 1, 2011 8:00 AM

Related Tags: finance, finances, IRS, Law, money, Richard Hammar, tax

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