FAQS and Church Accounting Blog
See the church accounting blog below for questions, answers, and tips from church AND nonprofit staff and volunteers.
Please use the "Site Map" or "Site Search" (links to both are at the top of the home page) BEFORE submitting your own question as there are THOUSANDS of Q&A in this FAQ section and you can probably find the answer to your questions much quicker that way =) Plus... I won't post the same questions over and over again.
NOTE: Please consider adding a reply/comment on some of the readers' post below. My husband is having some medical issues and I am not able to reply to all of the questions that my awesome readers submit.
Do not worry about being "expert" on the subject matter! We love hearing your suggestions, advise, and past experience on the subject.
All of my readers know that they should always "research" for themselves or SEEK the ADVICE of a professional before taking the word of everything they read on the internet as I "remind" them of that very important fact in almost all of my replies =)
But many times, hearing how someone else has handled a similar issue, is a great help!
Mar 21, 2023
Health Insurance Reimburesement
My church reimburses our Pastor for health insurance premiums paid through his wife's employer, which is a tax-free benefit under their cafeteria plan.
Mar 21, 2023
Is a benevolent payment made prior to an employee's start date taxable if that payment occurs in same calendar year as becoming an employee of the church?
Is a benevolent payment made prior to an employee's start date taxable if that payment occurs in same calendar year as becoming an employee of the church
Mar 21, 2023
Meal reimbursements
What would constitute being reimbursed for a meal? A pastor at our church likes to go out for lunch after church with church members, just to get together.
Mar 21, 2023
Monthly cell phone reimbursement
Our pastors are given a monthly reimbursment for part of their cell phone cost, but I know of no evidence as to the percentage of the phone being used
Feb 10, 2023
How do churches charge for meals?
Our church is providing meals on Wednesday evenings for those who want to eat before the service. We cannot absorb the cost into our current budget.
Feb 05, 2023
A visiting speaker
If an older minister from a different state comes and preaches a few meetings for our local church, is the love gift, that the people gave the church to
Jan 29, 2023
W2 required to be filed
Is the church required to send/file a W2 to the IRS or to the pastor when his church income is a round 21,000 but the housing allowance or fair market
Jan 29, 2023
Do we include the FMV of the use of a parsonage on a W2?
Would you put the fair market value of the parsonage a pastor used in box 14 of his w2?
Continue reading "Do we include the FMV of the use of a parsonage on a W2? "
Jan 23, 2023
Correct way to reimburse pastor
Our pastor is paid 43,000 a year base pay. Each month he has our secretary withhold 1,000 which he then turns in business receipts for and gets a check
Jan 23, 2023
Housing Allowance reported on 941, file a 941-x to amend or just leave it?
So our pastor moved into a new home in September and had housing expenses. We are allowing him to claim housing allowance. I filed the quarterly 941
Continue reading "Housing Allowance reported on 941, file a 941-x to amend or just leave it?"
Jan 09, 2023
How to legally move payroll funds to restricted line item
Currently, our youth pastor does not want to take pay. He would like to have the church take what he would get paid and move it from the youth pastor
Continue reading "How to legally move payroll funds to restricted line item"
Dec 04, 2022
Allocating Funds Between GL Line Items
Hi! I have purchased your books and spreadsheet. This is what I have setup and have been using for our small church for the past several months. My
Dec 04, 2022
How do I account for a mission's trip or youth summer camp?
Wondering how to account for a specific time restricted project like a mission's trip or summer camp? Can I set up a temporary fund just for that project?
Continue reading "How do I account for a mission's trip or youth summer camp?"
Dec 04, 2022
Tracking Fund Balances
I'm setting up my Chart of Account in Aplos and have A LOT of restricted funds. I don't want to set them all up as separate funds, but I'm not sure how
Dec 04, 2022
Entries for Expensing Unrestricted Funds
I'm still learning about some basics for nonprofit accounting. We have a project that we have allocated some of our Unrestricted Funds for that is not
Dec 04, 2022
Unused Insurance Line item balance
This year Pastor's insurance cost was lower than the amount budgeted from his package. At the end of the year do we: 1. let it expire, that budget balance
Dec 04, 2022
Taxable Gift for Pastor?
We gave our pastor a laptop computer for his 10th anniversary. Is this a taxable gift? We had donations from the congregation for $660.00 and the price
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.
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)
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
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
Aug 21, 2022
Youth minister housing allowance
Can our youth minister have his entire salary in housing allowance since he is bi-vocational?
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
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
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
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?"
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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