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.

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"

Jan 22, 2022

941-difference between housing allowance and fair value of parsonage

Last yr the Pastor was part-time and not yet qualified as a licensed pastor, so he got a housing allowance and Fica was taken from his wages which the

Continue reading "941-difference between housing allowance and fair value of parsonage"

Jan 22, 2022

Allowable business reimbursement account - used for health costs

One accountant stated that the allowable business reimbursement arrangement for the pastor could be used to cover medical expenses. The church provides

Continue reading "Allowable business reimbursement account - used for health costs"

Jan 22, 2022

Full-Time RVer

My denomination designates my pension as housing allowance and has an IRS letter confirming that designation. Beginning in June 2020 we live full time

Continue reading "Full-Time RVer"

Dec 24, 2021

Hourly Employee Housing Allowance

We have a part-time associate pastor who we are looking to convert to hourly (rather than PT salary). Currently, a portion of his salary is allocated as

Continue reading "Hourly Employee Housing Allowance"

Dec 24, 2021

Pastor's use of Church owned Parsonage AND Housing Allowance for Primary Residence

Our new pastor lives in a different city from where our church is located and drives here for the weekend and stays the weekend in our church-owned parsonage.

Continue reading "Pastor's use of Church owned Parsonage AND Housing Allowance for Primary Residence"

Dec 24, 2021

I don't have my commissioning certificate

We are commissioned missionaries that could claim a housing allowance, but are being told we need a certificate/letter with details of our commissioning,

Continue reading "I don't have my commissioning certificate"

Dec 24, 2021

Issuing a 1099

we are a small Wisconsin Church and we are looking to pay a women about $200.00 per week for secretarial work as a non-employee. what must the church

Continue reading "Issuing a 1099 "

Nov 14, 2021

Housing Allowance on Paycheck

I am an ordained minister and part of my compensation plan agreed upon in June 2021 was to move half of my pay to a housing allowance amount. My paychecks

Continue reading "Housing Allowance on Paycheck"

Nov 14, 2021

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"

Nov 14, 2021

Individual (not group) life insurance premiums-fringe benefit?

Are premiums paid by church, paid directly to the insurance company, for a Pastor's individual (not group) life insurance policy considered taxable income

Continue reading "Individual (not group) life insurance premiums-fringe benefit?"

Oct 18, 2021

Misclassification of Workers in a Church or Nonprofit

Misclassification of workers is a big issue with many small churches and nonprofits.

Continue reading "Misclassification of Workers in a Church or Nonprofit"

Oct 06, 2021

100% of salary as housing allowance.

I am moving to a congregation that is providing a monthly salary of $4200. I have some disability income, social security as well as my wife works and

Continue reading "100% of salary as housing allowance."

Oct 06, 2021

Interim Ministry Question

We hired an interim pastor who resides out of our area. He is requesting that based upon the fact that his employment will be less than 12 months, an

Continue reading "Interim Ministry Question"

Sep 20, 2021

Question: Carry temp restricted balances to next FY?

We have several temporarily restricted accounts, for example Youth Summer Trip where the money is designated (NTD) towards a youth trip and the costs for

Continue reading "Question: Carry temp restricted balances to next FY?"

Aug 31, 2021

Retired Pastor still working but not being paid.: what tax advantages are there?

Enjoyed reading your useful advice for pastors. I’m a retired pastor who still evangelizes, disciples, counsels, mentors, consults, and coaches a minimum

Continue reading "Retired Pastor still working but not being paid.: what tax advantages are there?"

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 =)



Share this page:
Enjoy this page? Please pay it forward. Here's how...

Would you prefer to share this page with others by linking to it?

  1. Click on the HTML link code below.
  2. Copy and paste it, adding a note of your own, into your blog, a Web page, forums, a blog comment, your Facebook account, or anywhere that someone would find this page valuable.