Presentation on theme: "Year end taxes report BY MAY HER (MAIV). Bible B.Pay Taxes, Romans 13:1-7 Must pay Taxes, Romans 13: 6, 7 This is also why you taxes, for the authorities."— Presentation transcript:
Bible B.Pay Taxes, Romans 13:1-7 Must pay Taxes, Romans 13: 6, 7 This is also why you taxes, for the authorities are God’s servants, who give their full time to governing. Give everyone that you owe him; if you owe taxes, pay taxes, …. Albert Einstein says, The hardest thing in the world to understand is the income tax. ***Very tough Job, but don’t worry*** Ephesians 1: 19-20 and his incomparably great power for us who believe. That power is like the working of his mighty strength, which he exerted in Christ when he raised him from the dead and seated him at his right hand in the heavenly realms.
THE COMMON ERRORS OF CHURCH Common error 1.Make payroll without an employer identification number. 2.The board allows the treasurer full authority to determination of Minister Status (W-2 or 1099). 3.Treating the Minister as an employee for social security purpose. Correct procedure New church must apply for an employer identification number from IRS before they can make any payment to a employee or contractor, by using the Form SS-4 from IRS office. The board should use IRS form SS- 8 to determination your Minister work Status. Minister are always self-employed for social security purposes with respect to ministerial services. The Board designates a housing allowance and reimbursement for the Minister at the beginning of the year.
THE COMMON ERRORS OF CHURCH Common error 5.Withholding taxes from Minister pay without authorization. 6.Not filing 941 or 944 forms 7.Not issuing W-2 or 1099MISC form. 8.Not retaining any church record. Correct procedure Minister is exempt from income tax withholding whether they report their income taxes as employees or self- employed; Minister who report their income taxes as an employee can request voluntary withholding by submitting a Form W-4 to the church. Those forms must be filed quarterly or annually by a church with an employee. A W-2 must be issued to each employee; and a 1099-MISC must be issued to each none employee (who received compensation of at least $600 during the year). Follow the Finance Manual for Alliance Church Treasurers (and pastors) APPENDIX E. “Record Retention Periods.”
THE COMMON ERRORS OF CHURCH Common error 9. Not complying with payroll tax deposit requirements. 10. Reimburse unaccountable to the minister and not report. Correct procedure The church must deposit the taxes it withholds. The church has to deposits these taxes by the 15 th of the following month with a qualified financial institution (along with a Form 8109). Set an Accountable Reimbursement Plan for Minister.
Designated Fund = Tax deductible 1.Programs & Projects: The governance authority established the program or project before any contributions are made and The program or project is consistent with exempt purpose and uses of the church 2.Short Term Mission Trips: Church Control Governance authority should pre-approve trip as meeting church exempt purpose Must not include a significant element of personal pleasure, recreation, or vacation Participants must have duties that are not nominal or minimal (6-8 hours per day)
Hmong Alliance Church of The Christian and Missionary Alliance Hmong Alliance Church of The C&MA May Her P.O. Box 7 Denver, Colorado 12345 Adams May Her 84-1234567 2284 1234 Main St. January 1, 1984 Denver, Colorado 12345
Reporting to Tax Authorities Quarterly Reports A.Form 941 Work-Sheet for Form 941 Base Salary for Rev. Moob, Xwbfwb$20,000 Church Social Security Grant $5,000 Total………………$25,000 / 4 = $6,250 Base Salary for Paaj Secretary …..$12,100 / 4 = $3,025 Then $6,250 + $3,025 = $9,275 The $9,275 will be appear on Form 941 line 2 B.Form W-3 Work-Sheet for Form 941 Total of Rev. Moob, Xwbfwb $25,000 Total for Paaj Secretary……………………$12,100 Totals…………………………$37,100 Then $37,100 will be appear on Form W-3 box 1
Example of Housing Allowance Form Housing Allowance Expense Form For Clergy Minister are permitted to exclude from their church income for federal income tax purposes a "housing allowance" designated by their employing church, to the extent that the allowance is used to pay housing expenses. To assist the HMONG DISTRICT in designating an appropriate amount, please estimate on this form the housing expenses you expect to pay next year, and then return to the finance officer of the Hmong District. CATEGORY ESTIMATED AMOUNT OF EXPENSE FOR 2009 1. Mortgage or Rental Payment __________________ 2. Utilities (electricity, gas water, trash pickup Local telephone charge)__________________ 3. Furnishings and Appliance (purchase and repair)__________________ 4. Structural Repairs and Remodeling__________________ 5. Yard Maintenance and Improvements__________________ 6. Maintenance Items (household cleansers, light bulbs, Pest control, etc... )__________________ 7. Miscellaneous __________________ Total Estimated Expenses for 2009__________________ The above listed expenses represent a reasonable estimate of my housing expenses for next year. I understand and agree that: The Hmong District will not designate a portion of my compensation as housing allowance until I complete and return this form. Retroactive designations of housing allowances are not legally effective. It is my responsibility to notify the Hmong District in the event that these estimates prove to be materially inaccurate during the year. My housing allowance exclusion is an exclusion for federal income taxes only. I must add my housing allowance as income in reporting my self-employment taxes on Schedule SE (unless I am exempt from self- employment taxes). _______________________________________________ Signature of Minister Date I attest that I received this form from the above minister on____________________, 2009 _____________________________________________________ Signature of DS Date
How to set up an Accountable Reimbursement Plan The Church must have: 1.The payment of expense must be for ordinary and necessary expenses for job performance. 2.There must be a written policy or plan. 3.The employer (Church) must allocate expense fund that are distinct from personal compensation. 4.The employee (Minister must account for expenses in a timely and proper manner. The reporting system should require the pastor to submit written records and receipts that detail each expenditure. These should include: 1.The date 2.The type of expense 3.To whom it was paid 4.The business or ministry purpose If expenses exceed the amount allowance for reimbursement plan may not be paid or reimbursed by salary reduction. For example, if $5,500 is budgeted for the year but the minister actually spends $6,000 by year end, the extra $500 cannot be treated as a reimbursement by simply reducing the minister’s $500.
8 4 1 2 3 4 5 6 7 Hmong Alliance Church 1234 Main St. Denver CO12345
8 4 1 2 3 4 5 6 7 Hmong Alliance Church of the C&MA 1234 Main St Denver,CO12345 2 3,025 00 375 10 450 73 2,450 73 2,000 00 2,450 73 9,275 00 75 63
X Hmong Treasurer Treasurer Signature Goes Here
Pastor 123-45-6789 84-1234567 Hmong Alliance Church of the C&MA 1234 Main St Denver, CO 12345 Rev. Moob Xwbfwb 7777 Forgiven Rd. Denver, CO 12345 Ordained – Not included above 10,000 Housing Allowance 6,000 CO 25,000 22-12345678925,0000 X 403b
Secretary 222-33-4455 84-1234567 Hmong Alliance Church of the C&MA 1234 Main St Denver, CO 12345 Paaj Secretary 7777 Forgiven Rd. Denver, CO 12345 12,100 2,000 750.00 175.46 CO 12,100 22-12345678912,100265.00
37,100 12,100 8,000 750.00 175.4622 84-1234567 Hmong Alliance Church of the C&MA 1234 Main St Denver, CO 12345 CO 22-12345678912,100265.00 12,100 Hmong Treasure303 123-4567