Transcript Annual conference 2009

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 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
Correct procedure
1.
Make payroll without an
employer identification
number.
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.
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.
The board should use IRS form SS8 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
Correct procedure
5.
Withholding taxes from
Minister pay without
authorization.
Minister is exempt from income tax
withholding whether they report their
income taxes as employees or selfemployed; Minister who report their
income taxes as an employee can
request voluntary withholding by
submitting a Form W-4 to the
church.
6.
Not filing 941 or 944 forms
Those forms must be filed quarterly
or annually by a church with an
employee.
7.
Not issuing W-2 or 1099MISC
form.
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).
8.
Not retaining any church
record.
Follow the Finance Manual for
Alliance Church Treasurers (and
pastors) APPENDIX E. “Record
Retention Periods.”
THE COMMON ERRORS OF CHURCH
Common error
Correct procedure
9.
Not complying with payroll tax
deposit requirements.
The church must deposit the taxes it
withholds.
The church has to deposits these
taxes by the 15th of the following
month with a qualified financial
institution (along with a Form 8109).
10. Reimburse unaccountable to the
minister and not report.
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
1234 Main St.
Denver, Colorado 12345
Denver, Colorado 12345
Adams
84-1234567
May Her


2284

January 1, 1984

Church Staff/Employee Compensation
•
Compensation Package Examples:
1.
Clergy, Rev. Moob Xwbfwb
Salary:
Base Salary …………………………… $20,000
Housing Allowance………………. $10,000
Reimbursement Allowance………
Employer Social Security Grant …
Total…………………………………..
$40,500
Benefits:
Heath/Dental Insurance ………….
Total Package Value……………… $45,500
2.
Non-Clergy, Paaj Secretary
Salary:
Base Salary ………………………
$5,500
$5,000
$5,000
$12,100
Benefits:
Heath/Dental Insurance ………….
Total Package Value……………..
$12,600
$2,500
1
2
3
Moob
Xwbfwb
123 45 6789
7777 Forgiven Rd
Denver, CO 12345
Hmong Alliance Church 1234 Main St. Denver, CO 12345
84
1234567
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
Total for Paaj Secretary……………………
Totals…………………………
$37,100
Then $37,100 will be appear on Form W-3 box 1
$25,000
$12,100
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.
•
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•
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•
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CATEGORY
OF EXPENSE
1.
2.
3.
4.
5.
6.
Mortgage or Rental Payment
Utilities (electricity, gas water, trash pickup Local telephone charge)
Furnishings and Appliance (purchase and repair)
Structural Repairs and Remodeling
Yard Maintenance and Improvements
Maintenance Items (household cleansers, light bulbs,
Pest control, etc... )
7. Miscellaneous
Total Estimated Expenses for 2009
•
•
ESTIMATED AMOUNT
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 selfemployment 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
Hmong Alliance Church
1234 Main St.
Denver
CO
12345
6 7
8
4
1
2
3
4
5
6
7
Hmong Alliance Church of the C&MA

1234 Main St
Denver,
CO
12345
2
9,275 00
2,000 00
3,025 00
375 10
3,025 00
75 63
450 73
2,450 73
2,450 73
2,450 73
2,450 73
X
Signature Goes Here
Hmong Treasurer
Treasurer
123-45-6789
84-1234567
25,000
6,000
Hmong Alliance Church of the C&MA
1234 Main St
Denver, CO 12345
Rev. Moob
X
Xwbfwb

7777 Forgiven Rd.
Denver, CO 12345
CO
22-123456789
Ordained – Not included
above
10,000 Housing
Allowance
25,000
0
Pastor
403b
222-33-4455
84-1234567
12,100
2,000
Hmong Alliance Church of the C&MA
1234 Main St
Denver, CO 12345
12,100
750.00
12,100
175.46
Paaj
Secretary
7777 Forgiven Rd.
Denver, CO 12345
CO
22-123456789
12,100
265.00
Secretary

2
2
37,100
8,000
12,100
750.00
12,100
175.46
12,100
265.00
84-1234567
Hmong Alliance Church of the C&MA
1234 Main St
Denver, CO 12345
CO
22-123456789
Hmong Treasure
303
123-4567
Questions?
Hmong Alliance Church of C&MA
1234 Main St
Denver, CO 12345
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
Joe A. Smith
7777 Forgiven Rd
Denver, CO 12345
84-1234567
100.00
100.00
100.00