The Church Finance & Minister Tax Podcast- Church finances, Minister Taxes, Minister payroll, IRS Compliance cover art

The Church Finance & Minister Tax Podcast- Church finances, Minister Taxes, Minister payroll, IRS Compliance

By: Michelle R Brown EA Christian Business Mentor Enrolled Agent
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  • Summary

  • Hey there, I’m Michelle and I love all things Jesus, business and church finances! I help church finance individuals just like you go from feeling confused and frustrated with what you don’t know about church finances, to being more confident in your role while increasing your proficiency and expertise in the church finance realm. Are you tired of Google searches that result in endless pages of answers to your questions about church finances, housing allowances and clergy taxes? Do you need help with getting the right processes and procedures in place for your church office or business? Are you looking for a group of like-minded believers who understand your desire to do business and serve the local church God’s way? In this podcast, you will find practical AND biblically based business solutions for your church office or bookkeeping business that serves churches . We will give you tried and true bookkeeping tips and lessons that are specific to the church ministry and other foundational practices that you need in place to make sure that the church(es) that you serve are in compliance with current industry standards and IRS tax code. We will also lean into mindset training to help you think like the business professional God created you to be and renewing your mind through the application of truths from the Word of God that will encourage and free you to do business God’s way while learning what you didn’t even know you needed to know! My mission is twofold: #1 to help church bookkeepers/treasurers/finance individuals become more confident in their role and increase their expertise in church finances. #2 to help business owners unapologetically do business God’s way and grow a successful bookkeeping business they feel good about and that helps make the world a better place. If you are ready to walk out the calling the Lord has on your life while serving Him with excellence - then you are definitely in the right place! I tried to achieve success in the secular world but felt unfulfilled and like an outsider because of my beliefs. I finally realized that taking the risk to create a business (or businesses in my case), where I could openly express my faith and beliefs and to put God at the center of everything I did, was more exciting to me than the fear of the ”what if’s”. So, I did it! Not once, but twice! I want to share with you what I’ve learned through my 20 years of business experience in both Christian retail and my bookkeeping business to help you take that step of faith and walk in courageous obedience to God. If you are ready to serve your church with confidence and/or create a business that keeps God at the center of everything you do WHILE helping to make the world a better place all at the same time - this podcast is for you! So grab your Bible, a notebook or laptop, and the dream God gave you, because we’re doing this. It’s time to serve Him with Excellence! Learn: www.churchfinances.org Community: https://www.facebook.com/groups/churchbookkeepingandclergytax
    Copyright 2023 All rights reserved.
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Episodes
  • Ep 68 ~ Ways to reduce taxable income to Ministers

    Ep 68 ~ Ways to reduce taxable income to Ministers
    Jun 25 2024
    "In today's episode, we're exploring 'Ways to Reduce Taxable Income for Ministers.' Ministers often face unique tax challenges, balancing their roles as both employees and self-employed individuals. We'll uncover effective strategies to legally minimize taxable income, with a special focus on salary reduction agreements and the option to refuse part of one's salary. Whether you're a minister looking to optimize your tax situation or simply interested in the intricacies of clergy taxation, this episode is packed with valuable insights and practical advice. Let's get started!" Episode Quote: "Today’s episode quote is by Amy Porterfield, a go-to expert for creating online and digital courses. Amy says, 'I don’t even realize how good it can get, but I’m willing to try and find out.' Introduction: Believe it or not, as part of your church’s finance team, one of the top priorities is to help minimize the tax liability of the minister’s income. Many ministers are not well-versed in the U.S. Tax Code System and are also not finance gurus. They are there to share the Gospel and equip the members for the work of the Gospel. It’s up to the church treasurer, bookkeeper, personnel team, finance team, or whatever title you hold within your church, to take care of the finances, including the minister's compensation package. Dual Status Explanation: Ministers have a unique dual status for tax purposes: they are considered employees for income tax purposes and self-employed for Social Security tax purposes. This dual status opens up specific strategies for reducing taxable income. Pre-Tax Deductions: A pre-tax deduction is an amount subtracted from an employee's (minister's) gross income before taxes are calculated. This reduces the minister’s taxable income, thereby lowering the amount of income and SECA tax owed. Common examples include contributions to retirement plans (such as 403(b) plans), health insurance premiums, housing allowance, and even charitable contributions. Retirement Contributions: Utilizing tax-advantaged retirement plans like 403(b) and IRAs can significantly reduce taxable income.In 2024, the most an employee can contribute to a 403(b) account out of salary is $23,000.Housing allowances should typically be excluded from compensation for retirement plans due to their special tax treatment.Example: If a minister receives a $20,000 tax-free housing allowance, this amount is excluded from gross income and not included in the compensation for retirement plans. Housing Allowance: Explanation of the housing allowance exclusion and how to maximize this benefit. Charitable Contributions: Donating part of the salary back to the church can provide tax benefits.Example Scenario: Suppose you are a minister receiving a salary of $50,000. You decide to donate $10,000 back to the church. Verify the church’s status as a qualified organization under IRC §170(c)(2).Write a check for $10,000 and ensure it is deposited into the church's account.Obtain documentation such as a receipt from the church.Report the donation on your tax return, deducting it on Schedule A (Form 1040) as a charitable contribution. Refusal to Accept Full Salary: Definition: Refusal to accept full salary means a minister voluntarily chooses not to take a portion of their agreed-upon salary, reducing taxable income. Legal Basis: Treasury Regulation § 1.451-2(a) outlines the concept of constructive receipt of income. Impact on Taxable Income: If a minister specifies where the money should go, it remains taxable. If the minister has no expectation or intent to withdraw the money later and gives no direction on its use, it can be considered non-taxable. Example: Pastor Gary, with an annual salary of $50,000, decides to refuse $10,000 with no intent of drawing it later and no direction on its use, reducing his taxable income to $40,000.If Pastor Gary specifies the $10,000 to go to a specific fund, it becomes taxable income. Steps to Properly Document a Refusal to Accept Full Salary: Written Agreement: Create a written agreement stating the agreed-upon salary and the portion refused.Include the effective date and duration. Board Approval: Obtain approval from the church board and record it in the meeting minutes. Amend Employment Contract: Amend the minister's contract if necessary and ensure both parties sign it. Payroll Adjustments: Adjust payroll records to reflect the reduced salary. Maintain Records: Keep copies of all related documents for IRS review. Annual Review: Review the arrangement annually to confirm continuation or make adjustments. Example: Pastor Gary agrees to refuse $10,000 of his $50,000 salary, with a written agreement and board approval. Payroll is adjusted, and all documents are filed. This arrangement is reviewed annually. Conclusion: By understanding and utilizing these strategies—such as salary reduction agreements, housing allowances, charitable contributions, and the refusal to accept full...
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    21 mins
  • Ep 67 ~ Mid-Year Review for Your Church: Budget, Contributions, & Minister Housing Allowance

    Ep 67 ~ Mid-Year Review for Your Church: Budget, Contributions, & Minister Housing Allowance
    Jun 18 2024

    Episode Date: June 18, 2024

    Episode Summary: It is June and it is HOT! That means the year is halfway over, so now is the perfect time to conduct your mid-year review. In today's episode, we discuss the importance of performing a mid-year review for your church and the three key areas that require your attention: Budget, Contributions, and Minister Housing Allowance. Are you ready? Let’s go!

    Quote of the Day: Today's quote comes from John Gordon & Alex Demcazk's book, “The Sale”: “A fool thinks only of how his decisions will impact him in the moment, but someone who has wisdom considers the long-term implications of his decisions.”

    Episode Highlights:

    1. Budget:

    • Definition: An estimate of income and expenditures for a set period.
    • Importance: Budgets are not set in stone and can be adjusted when needed. With major church activities often occurring in the third and fourth quarters, a mid-year review can help prepare for increased expenses.
    • Action Steps:
      • Provide each department leader with a year-to-date copy of their budget and expenses.
      • Have leaders review their planning schedules for the remainder of the year to determine if they are on target or if adjustments are needed.
      • Follow your church's procedures for budget adjustments as outlined in your Financial Policy and Procedure guide.

    2. Contributions:

    • Mid-Year Contribution Statement: Send a mid-year contribution statement to donors, showing their giving year-to-date along with a Giving Supplement statement highlighting completed ministry projects.
    • Methods: Contribution statements can be mailed, picked up at the church office, or accessed via an online giving portal.
    • Communication: Include a sampling of ministry accomplishments in your church bulletin or pre-service slides to show the impact of donations.

    3. Minister Housing Allowance:

    • Understanding the Benefit: Review housing expenses year-to-date. Qualified ministers should take note of any unexpected expenses, such as storm damage or essential repairs.
    • Key Point: Housing allowance adjustments must be proactive, not retroactive. Ensure the designation is made before paying for the expenses to include them in the housing allowance.

    Call to Action:

    • Take the time now to conduct your mid-year review focusing on your church's budget, contributions, and minister housing allowance.
    • Share today's episode with other church leaders to help them understand the importance of these mid-year adjustments.
    xo, Michelle Next Steps: Grab Your Freebies:

    Six Steps to Doing Business God's Way biz owners

    A QuickStart Guide to Church Finances everybody

    Looking for a group of like-minded people that want to keep Jesus at the center of everything they do?

    Join the BEST FaceBook group for church finances at Church Bookkeeping and Clergy Tax Facebook Group

    Need an extra hand with an immediate situation? Schedule a Consultation:

    Schedule Consultation
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    18 mins
  • Ep 66 ~ Current QuickBooks Scam going around

    Ep 66 ~ Current QuickBooks Scam going around
    Jun 11 2024

    The current scam going around for QuickBooks is discussed in today's episode.

    I share the "red flags" to look for along with other helpful information.

    QBES Care Support 888-702-5228

    QB Support 800-446-4484

    to report a scam security@intuit.com

    xo, Michelle Next Steps: Grab Your Freebies:

    Six Steps to Doing Business God's Way biz owners

    A QuickStart Guide to Church Finances everybody

    Looking for a group of like-minded people that want to keep Jesus at the center of everything they do?

    Join the BEST Facebook group for church finances at Church Bookkeeping and Clergy Tax Facebook Group

    Need an extra hand with an immediate situation? Schedule a Consultation:

    Schedule Consultation
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    19 mins
Leadership Economics Christianity Spirituality
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