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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 .

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Hot Topics in Church, Christian Ministry and Personal Financial Management

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  1. 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

  2. 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.

  3. 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 …

  4. 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.”

  5. 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.

  6. 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.

  7. 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

  8. 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

  9. Typical Minister’s Annual Form W-2

  10. 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

  11. Resources for Counseling in Personal Finance

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