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Showing posts from July, 2008

Books for Financially Troubled Christians

Looking for a good resource to help a fellow believer rechart his or her financial course? Need some guidance yourself?

This summer, I read what appears to me to be each of three ministries' best single book resource for Christians' personal financial management. Here's the author, title, and website link to each along with my brief assessment of its strengths and weaknesses or best applications (in alphabetical order by author):

Ron Blue, Master Your Money (2004), http://www.ronblue.com/
Blue’s Financial Planning Process offers steps to rise from one’s current status to achieve long-term goals. It's a comprehensive, biblically based plan for Christians at all financial levels. Some may find its terms and detailed schedules overwhelming. He doesn't offer as many nuts-and-bolts of balancing one's budget, but, as a CPA, it's probably my favorite of the three. Website: Points to resources available at Amazon.com; personal financial recovery is not its major focus…

Standard Mileage Rates

...sorry that this is late, but the standard mileage rates changed July 1, 2008...

1/1-6/30/08 rates (the OLD rates)
Business miles--$.505 per mile
Charitable (volunteer) miles--$.14 per mile
Medical & moving miles--$.19 per mile

7/1-12/31/08 rates (the NEW rates)
Business miles--$.585 per mile
Charitable (volunteer) miles--$.14 per mile
Medical & moving miles--$.27 per mile

Source:
http://www.irs.gov/taxpros/article/0,,id=156624,00.html

Housing and Economic Recovery Act of 2008

President Bush sign HR 3221 today. I'll share a couple of quick excerpts that may be of interest to ministers who are considering a home purchase or already own a home.

First-time homebuyer credit. A credit against federal income tax equal to 10 percent of the purchase price (maximum credit of $8,000) for first-time homebuyers applies if the taxpayer "had no present ownership interest in a principle residence during the 3-year period" preceding the purchase. The purchase must be on or after April 9, 2008, and before April 1, 2009. Maybe now's the time for more churches to get out of the real estate business and sell their parsonages--something I've often advocated!

Married couples with more than $150,000 of income will lose the credit ratably as their income approaches $170,000, when it's eliminated entirely. On the other end of the income continuum, taxpayers with no tax will not receive a larger refund due to the credit. Apparently, it can only be used agains…

Retirement Distributions as Housing Allowance

Question:

Daniel asks the following question that I've abridged:

On February 6 you posted a topic on Minister's retirement distributions designated as Housing allowance. Are you technically referring to a 403(b)9 plan? In such a plan, the Plan Administrator as an agent of a church body actually makes the distributions and I would assume be able to easily make such a designation before issuing a 1099-R. However, what about 403(b)7 or 403(b)1 plans where a custodial account plan sponsor (typically a mutual fund company) handles the distributions? Are retired ministers allowed to "correct" a 1099-R on their 1040s?

Answer:

In cases such as Daniel has addressed, the retired minister reports the full distribution on Line 16a (2007 Form 1040) and the taxable amount after allowable housing allowance on Line 16b. The minister must follow all other requirements of IRS Publication 1828, the Clergy Housing Allowance Clarification Act of 2002, and IRS Regulation Section 1.107-1.

The m…

Records Retention

Question:

A church treasurer in Wisconsin writes: "I've often wondered if I need to keep all the receipts on items purchased for the church? Here's an example. An individual purchases items for VBS, they turn in the receipt, and I reimburse them. Do I need to keep those receipts?"

Answer:

You should keep receipts like these for seven years—the statutory limit for most legal actions. In a worst case scenario, you’d be responsible to prove that each disbursement was for legitimate expenses of the ministry.

Many treasurers use a system such as the following:
1. Each paid invoice is clearly marked “PAID” along with its check number and date.
2. During the year, paid invoices are filed alphabetically by vendor or payee name. A church with a large volume of payments may set up 26 folders, each for a letter of the alphabet. If, for example, ABC Supply has a lot of paid receipts, then a 27th folder can be labeled and those documents filed in it, etc. A receipt for VBS items reimbu…

Gifts to Ministers

Question:

If a minister receives a ‘gift’ from another church (not his home church), is it taxable compensation?

Example:

A church gives ‘gifts’ to a minister on his birthday, anniversary etc. Can it be treated as a nontaxable gift if that church writes a letter stating its intention to give?

Answer:

Internal Revenue Code section 102(c) clearly states that gifts given to employees by their employers are taxable compensation. The IRS has consistently applied this provision to self-employed (non-employee) individuals who provide services for an organization as well. Only the facts and circumstances surrounding a gift can determine whether IRC section 102(c) does or does not apply; a letter stating that a payment is a gift will not override the substance of a transaction.

Often churches will support a minister of another congregation that is unable to provide full support to its own minister. Similar to foreign missionaries supported by congregations, the IRS will imply that services were pr…