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. www.irs.gov

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.www.irs.gov

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. Assumptions Typical Minister’s Annual Form W-2 $35,000Cash salary 30,000Housing allowance designation (6,000)Minister’s 403(b) plan elective deferral (5,000)Pastor’s optional federal and state income tax withholding $54,000Net amount paid to minister

9. Typical Minister’s Annual Form W-2

10. Resources for Counseling in Personal Finance STRENGTHS: A slap upside the head! Testimonies STRENGTHS: Bible training for all financial levels STRENGTHS: Easy-to-read, Bible-rich teaching

11. Resources for Counseling in Personal Finance