June 28, 2012
Eligible churches could receive thousands of dollars for their coverage.
This morning's Supreme Court decision to largely uphold President Obama's health care reform legislation appears to preserve a health insurance credit for small employers, including churches, to help cover the costs of providing coverage to employees.
This means churches that meet certain criteria remain able over the next few years to apply for the credit.
To fully understand the credit and how it works, Richard Hammar recorded a brief video explanation last year and also wrote a Feature Report covering the numerous details of the provision. Eligible churches that use a fiscal calendar year ending December 31 will use May 15 deadlines, while those using a different fiscal year will use a deadline of the 15th day of the 5th month after their fiscal year closes.
Some churches who have applied for the credit have received thousands of dollars. Others have said they have encountered lengthy delays from the IRS with the processing of their applications.
June 28, 2012
The last steps of compensation planning—payroll withholdings and reporting
Editor’s Note: Today is the last part of a multiple-part series reviewing church compensation planning that complies with IRS guidelines. Last week we looked at how to determine the taxability of benefits and other compensation.
The final part of the compensation planning process actually has two steps. With all forms of compensation, you must determine the following:
- The required withholding; and
- The proper reporting.
Most people are accustomed to working with these two steps in order to do payroll. While most churches do complete these steps in regards to cash compensation, few seem to complete it correctly in regards to noncash compensation.
Continue reading Compensation Planning for Churches, Part 7...
June 26, 2012
The plate reigns, but electronic options are gaining traction.
The graphic above, which appears in the July edition of Church Finance Today, shows the ways that people give to their churches, based on results from the 2012 State of the Plate giving survey sponsored by Christianity Today, Maximum Generosity, and ECFA.
The offering plate tops the list, but electronic giving options, such as automatic withdrawal, online giving, and cell phone giving apps, are gaining ground. Enough so that Brian Kluth, founder of Maximum Generosity, predicts one or more e-giving options will surpass the envelope packet--a mainstay for years at many churches--this year.
How is your church collecting tithes and offerings? Are electronic options making the same advances in your congregation?
June 21, 2012
Determining the taxability of benefits and other compensation
Editor’s Note: Today is part six of a multiple-part series reviewing church compensation planning that complies with IRS guidelines. Last week we looked at how to properly classify employees who are ministers.
Determining the parts of compensation that are taxable is the most crucial step of the compensation planning process and is also a step often missed in properly reporting compensation. There is a tendency to ignore all the benefits and cash that do not flow through the payroll system. The result is a tendency to underreport income. When a church fails in its duty to properly report taxable income, it places its employees in serious jeopardy of potential penalties, additional taxes, and even jail time.
Each element of the compensation package has to be evaluated to see if it is taxable. Remember, everything is taxable until a provision in the Internal Revenue Code says that it is not. Therefore, it should be presumed that something is taxable until it can be proven that it is not taxable.
Remember, when determining taxability, it must be determined for purposes of federal income tax, Social Security tax (FICA), and Medicare tax, if the compensation is for a nonminister employee. If it’s for a minister, then the employer is only concerned about the taxability for purposes of federal income tax.
Continue reading Compensation Planning for Churches, Part 6...
June 19, 2012
As malls empty, churches are moving in. Are they a bane or a blessing to commercial neighbors?
George Romero’s classic 1978 film Dawn of the Dead centers on a tattered group of zombie-plague survivors huddled together in a shopping mall. In the aftermath of society’s collapse, the vast parking lots, brightly lit stores and restaurants hold everything that a small group could possibly need to live indefinitely through the collapse of society.
Romero’s images of empty escalators and desolate shopping centers were a powerful social critique in 1978. At the time, the thought of an abandoned shopping mall was a major stretch of the imagination, a picture that stuck with you.
But today, the scene is awfully familiar.
Continue reading The Church Next Door...
June 14, 2012
How to properly classify employees who are ministers
Editor’s Note: Today is part five of a multiple-part series reviewing church compensation planning that complies with IRS guidelines. Last week we looked at how noncash benefits must count as compensation.
Classifying the employees who are ministers is a crucial step in the compensation planning process and must be completed at some point. Ministers have different tax treatment than other employees, and this treatment is mandated by law. It isn't optional, so it is important to know who qualifies as a minister for federal tax purposes. (At this time we are only dealing with defining ministers for federal tax purposes, and not for other purposes, such as those for the Department of Labor.)
Minister's Tax Status
Ministers have what is commonly referred to as "dual tax status." For federal income tax purposes, a minister is generally treated as a common law employee. Additionally, while subject to paying federal income tax, a minister is exempt from the mandatory withholding of the federal income tax. For payments into Social Security, the minister is always self employed. This translates into the fact that a minister can never pay into the Social Security/Medicare system the way a regular employee does through the traditional employee payment with an employer matching payment, better known as FICA/Medicare. This is defined by law under IRC Sections 1402 and 3121.
Continue reading Compensation Planning for Churches, Part 5...
June 12, 2012
Your personal financial example sets the pace for your church.
The average church in America today has only one full-time pastor. This leaves the pastor to handle the majority of the church’s duties, including business matters. In referencing the qualifications for a pastor, 1 Timothy 3:4 says the leader should be one who rules his own house well. What does this mean? It means the pastor must manage his own family correctly, in a commendable way that leaves no room for blame.
The point continues with this rhetorical question: “If a man does not know how to rule his own house, how will he take care of the church of God?” (1 Tim. 3:5, NKJV). The answer is, he can’t. Ministers must be able to manage their own financial affairs in a God-pleasing manner.
Many important aspects are involved with the handling of business and financial matters. It is crucial that a pastor be able to conduct business in town, pay taxes, pay bills, and so on. The most basic part of your home’s business is a budget. Here are some ideas for creating and implementing one.
Continue reading Pastors: Bring Financial Order to Your House...
June 7, 2012
Noncash benefits must count as compensation
Editor’s Note: Today is part four of a multiple-part series reviewing church compensation planning that complies with IRS guidelines. Last week we looked at how to avoid costly penalties when setting pay.
Before an organization can move on to dealing with compensation issues, it has to know what it is providing an employee. Identifying all benefits may sound simple, but many organizations don't really do this. This requires a look at each employee to determine what is provided. A complete list should be made.
Making a List
List everything that benefits an employee, and don't worry about the tax effects at this point. Determining how to treat an item of compensation for tax purposes takes place later in the process. Additionally, don't forget to list the items that are noncash benefits. Don't limit the list to only cash items. Remember one of our first lessons: everything that benefits an employee is a form of compensation.
Although not all-inclusive, the following list has items to consider:
Continue reading Compensation Planning for Churches, Part 4...
June 4, 2012
How this surging visual aid for social media helps congregations.
Imagine if you had access to the world’s largest bulletin board—a place where you could exchange ideas and images from around the globe. That’s one of the major benefits of the increasingly popular website, Pinterest.
Unlike sites such as Facebook and Twitter, which tend to be driven by words, Pinterest is propelled primarily through visuals. The site is the equivalent of a giant bulletin board allowing users to pin their favorite thoughts, ideas, photos, and images. Once “pinned” (the equivalent of “posted”), any user can re-pin the image, like it, or comment on the pinned item.
Pinterest is estimated to be the third most popular social network, behind only Facebook and Twitter. Though the company is hesitant to release exact numbers, the site attracted about 19 million monthly users in April, according to The New York Times. Not only is the user base growing at an exponential rate, but the length of time users remain on the site is impressive. While the average user spends less than twelve minutes on Twitter and eight minutes on LinkedIn, they spend more than sixteen minutes—or 25 percent more time—on Pinterest.
This enormous bulletin board creates an opportunity for churches to up the ante of their quality of visuals used in their congregations, as well as exchange ideas for projects such as VBS, sermon series, Sunday school classes, and more. Like many other social media sites, users can use keywords and hash tags in the descriptions and link to another webpages—including your church’s.
Here are eight ways your ministry can utilize Pinterest starting today:
Continue reading 8 Ways Churches Are Using Pinterest...