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

Payroll Tax Credit for New Ministry Payroll Tax Credit for New Ministry

EmployeesEmployees 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.

ObamaCare and Your MinistryObamaCare 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 …

ObamaCare and Your MinistryObamaCare 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.”

ObamaCare and Your MinistryObamaCare 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.

Form 990-N and Loss of Tax-exempt Form 990-N and Loss of Tax-exempt

StatusStatus 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.

Employment Records and ReportingEmployment Records and Reporting

ReviewReview

Assumptions

Assumptions

Typical Minister’s Annual Form W-2Typical Minister’s Annual Form W-2

$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

Typical Minister’s Annual Form W-2Typical Minister’s Annual Form W-2

Resources for Counseling in Personal Resources for Counseling in Personal

FinanceFinance

STRENGTHS: A slap upside the head! Testimonies

STRENGTHS: Bible training for all financial levels

STRENGTHS: Easy-to-read, Bible-rich teaching

Resources for Counseling in Personal Resources for Counseling in Personal

FinanceFinance