Nonprofit and Church Accounting Blog

This accounting blog...

  • informs you when any new web pages appear on my site,
  • shows you the latest question, comment, or tip posted by readers...(please feel free to browse the questions below and answer the ones you feel comfortable answering),
  • let's you know when an error is found in my free financial spreadsheets and how to correct them.

Oct 31, 2022

Year End Checklist for Churches

See a year end checklist for churches. Includes tasks that should be completed before the end of the year to ensure a smooth transition into the new year.

Continue reading "Year End Checklist for Churches"

Oct 31, 2022

How to opt back in to paying social security taxes on clergy income

I have a client that opted out of paying in social security taxes on his clergy income. Now as he is approaching retirement, he would like to start

Continue reading "How to opt back in to paying social security taxes on clergy income"

Oct 31, 2022

New COVID Financial Relief Available for Churches

In a little-known change, churches have access to a new round of COVID relief funding. Unlike the PPP (Paycheck Protection Program) program, a church qualifies if it suffered only operational impact stemming from a government order.

Proving a negative financial impact is not required to be eligible for Employee Retention Tax Credit (ERTC) relief.

In short, churches that cut back programs or services qualify for these refunds.

Consider whether during COVID your church experienced any of the following?

- Camps cancelled

- Youth group cancelled

- Small groups cancelled

- After service fellowship cancelled

- Training and meetings cancelled

If any of these things happened to your church for a period of time the ERTC may be available to your church.

So, what is the big deal with the ERTC? 

Refunds available under the ERTC can be as large as $5,000 per qualified employee for 2020 and as large as $21,000 per qualified employee for 2021.

One of our CPA partners, Wisdom Over Wealth has helped claim over $4 million in ERTC relief for churches with over $1 million more in the process.

Wisdom is equipped to evaluate the benefit of the ERTC for your church. They will calculate the credits available and prepare the necessary forms for filing with IRS.

To learn more, click the link below and complete the "Contact" form and put “ERTC Program” in the MESSAGE box and I will get you in touch with Wisdom Over Wealth, so they can get started on your evaluation!

Continue reading "New COVID Financial Relief Available for Churches"

Oct 09, 2022

How should we account for paying someone for guest preaching?

What would you suggest as best practice for paying someone for pulpit supply/ or filling the pulpit from time to time? What taxes are necessary? How should

Continue reading "How should we account for paying someone for guest preaching?"

Sep 10, 2022

Housing Allowance

Is Housing Allowance included on Form W-2, Box 1 (Wages, Tips, Other Compensation)

Continue reading "Housing Allowance"

Sep 10, 2022

What day can I start counting expenditures towards housing allowance? First official start day at work or before that?

What day can I start counting expenditures towards housing allowance? First official start day at work or before that? I moved from one state as a pastor

Continue reading "What day can I start counting expenditures towards housing allowance? First official start day at work or before that?"

Sep 10, 2022

Can a pastor give back/donate his housing allowance to the church as a charitable contribution?

Due to COVID, receipts of cash contributions were low. The church had me do a W2 for pastors housing allowance. The fact is they now are asking me

Continue reading "Can a pastor give back/donate his housing allowance to the church as a charitable contribution?"

Aug 21, 2022

Youth minister housing allowance

Can our youth minister have his entire salary in housing allowance since he is bi-vocational?

Continue reading "Youth minister housing allowance "

Aug 21, 2022

What is the housing allowance cap?

We are a small congregation less than 40 persons. In the past we have not designated a 'Housing allowance' and given the pastor a 1099-Misc for the

Continue reading "What is the housing allowance cap? "

Aug 21, 2022

Love gift to worship team

if we give a love gift to members of the worship team will we have to issue a 1099-misc if it is over $600.00? Susan

Continue reading "Love gift to worship team"

Aug 14, 2022

Pastor "donates" his own 401k(k) to a church to build him a "parsonage" which will be reconveyed back to him when he leaves the church.

Can a pastor donate his own 401(k) or 403(b) assets to the church, thereby, avoiding the taxes on the withdrawal of the funds then get the church to build

Continue reading "Pastor "donates" his own 401k(k) to a church to build him a "parsonage" which will be reconveyed back to him when he leaves the church."

Aug 14, 2022

Wedding use of building -- donation

Can we give a contribution receipt to a family that made a monetary donation to the church that used the building for a wedding? They are not members

Continue reading "Wedding use of building -- donation"

Jul 03, 2022

Church owned Parsonage plus housing allowance, can the same Pastor have both?

Our Church owns a Parsonage which our newly chosen ordained pastor and his family will live in. It is my understanding that the fair market (utilities

Continue reading "Church owned Parsonage plus housing allowance, can the same Pastor have both?"

Jul 03, 2022

Is the 7.65% social security allowance hard and fast or can a different amount be offered

Is the 7.65% social security allowance hard and fast or can a different amount be offered?

Continue reading "Is the 7.65% social security allowance hard and fast or can a different amount be offered"

Jun 20, 2022

Housing Allowances from 2 Different Work Places

I work in two places, one is a hospice chaplain and a church pastor. These two places that offer housing allowances, is it legally correct to receive housing

Continue reading "Housing Allowances from 2 Different Work Places"

May 20, 2022

Are Grants Tax-deductible?

A member in our church has his private ministry to the marginalized but has no NPO. Can our church or NPO receive donations for this guy’s ministry and

Continue reading "Are Grants Tax-deductible?"

May 20, 2022

Contribution for Future Pledge Period

We started our pledge campaign for the upcoming July - June fiscal year (it is now May). We are receiving donations for these future pledges, most are

Continue reading "Contribution for Future Pledge Period"

Apr 11, 2022

Church Embezzlement and Credit Cards Policies

Church embezzlement is on the rise. Learn what you can do to protect your church against this financial crime.

Continue reading "Church Embezzlement and Credit Cards Policies"

Apr 08, 2022

Pastor's Utilities Paid by Church

In a situation where our pastor has an agreed upon housing allowance, but the church also has a budget line where we pay his utilities. Should the utilities

Continue reading "Pastor's Utilities Paid by Church"

Apr 08, 2022

Housing Allowance and 1st Position HELOC

I recently qualified for housing allowance and have my mortgage set up under a 1st position/lien HELOC. I would guess the interest payments on the HELOC

Continue reading "Housing Allowance and 1st Position HELOC"

Apr 08, 2022

HA pay is only recorded in church financial books and not declared elsewhere except by letter to the clergy...correct?

Our part-time clergy receive their full pay as designated HA. My understanding is that it is NOT included in the wages reported on our Qtrly 941s.

Continue reading "HA pay is only recorded in church financial books and not declared elsewhere except by letter to the clergy...correct?"

Apr 08, 2022

Does my church have to file a 990-T or any tax form for profit from an investment used to further its nonprofit mission?

Does my church have to file a 990-T or any tax form for profit from an investment used to further its nonprofit mission?

Continue reading "Does my church have to file a 990-T or any tax form for profit from an investment used to further its nonprofit mission?"

Apr 08, 2022

Question

I am employed by my church as the senior pastor. For nearly 30 years they have outright paid for my health insurance plan. I am turning 65 and the church

Continue reading "Question "

Mar 06, 2022

Housing Allowance and SE Tax for Retired Ministers with Second Ministry Career

If a Minister retires from the Govt/Military (was a military minister) and receives a 1099-R for retirement pay, but then starts a second career as a minister

Continue reading "Housing Allowance and SE Tax for Retired Ministers with Second Ministry Career"

Mar 06, 2022

College paying Minister employee housing allowance.

I am a tax professional who does many clergy tax returns and think I know all the rules but... Several years ago I had a client start teaching at a

Continue reading "College paying Minister employee housing allowance."

Feb 23, 2022

What parts of pastor's compensation is included on 941 line 2?

I would like to make sure I am completing my quarterly 941 correctly with regard to our Pastor's compensation. Here are sample (not actual) amounts:

Continue reading "What parts of pastor's compensation is included on 941 line 2?"

Feb 23, 2022

How to transfer funds from one one class to another class in QBO

I use QBO for our church accounting. I need to transfer funds from our general fund to our designated building fund. I use classes in QBO. Both funds

Continue reading "How to transfer funds from one one class to another class in QBO"

Feb 23, 2022

Accounting Manager

The pastor is an employee of the church but he receives donations outside of his W2. Shouldn’t the pastor receive a 1099 as well?

Continue reading "Accounting Manager "

Jan 22, 2022

One EIN, Two Accounting Firms File 941

The church has one EIN. One accounting firm will file 941 for the church's mission employees. A second accounting firm will file a 941 for the church's

Continue reading "One EIN, Two Accounting Firms File 941"

Jan 22, 2022

Weekly designated gift to pastor & W2

This past year, a new member started designating gifts to our two pastors each week. One is a close relative to whom he gives a couple hundred each

Continue reading "Weekly designated gift to pastor & W2"

If you want to DIY your payroll, I highly recommend you look at using Gusto! It is very user friendly and their support is awesome! Plus they know how to set up and maintain payrolls for churches and nonprofit organizations.

Note: I am a "partner" of Gusto, but as I have told you before ... I never recommend anything that we or our clients have not tried and love =)



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