This blog posts answers to questions given to us by ministers and others serving in Christian ministries advancing the gospel of Jesus Christ. It also discusses other financial topics that those in gospel ministries face. We trust the information provided can be helpful to you.
Question: A church treasurer recently was handed a Form 4361 by his church's youth minister. It appeared to have been altered. Can the treasurer contact the IRS to get verification of the approval?
Regardless of the youth pastor’s success or failure to gain an exemption from self-employment (SE) tax on ministerial earnings (by virtue of his successful Form 4361 application), the church’s treatment of his wages is unaffected. By definition, a minister is a dual status employee. This means that he is considered self-employed for purposes of SE tax. He is not subject to nor eligible for FICA tax withholding and matching by the church. If he fails to pay his own SE tax on his personal return and it is determined by the IRS that he has no Form 4361 approval, he will be facing a very large tax penalty and interest assessment.
Our website provides an aid to preparing a church's Forms W-2. They are prepared in exactly the same way whether or not the pastor has opted out of SE tax.Select the Microsoft PowerPoint presentation entitled Church and Christian Ministry Compensation Concepts. by following the link provided here.
In one respect, our response could be, “don’t worry about it.” In another respect, our response could be, “Your youth pastor is making a terrible mistake. Whether in ignorance or in malice we cannot tell.”
Regarding a direct contact with the IRS to get verification of the approval, the IRS will not disclose private taxpayer information without authorization from the taxpayer.
On December 13, 2016, President Obama signed the 21st Century Cures Act, allowing qualified small employers to offer Health Reimbursement Arrangements (HRA) that follow certain terms.
After the Affordable Care Act was passed, the IRS originally determined that an HRA was not a qualified group health plan. The Cures Act overrules this decision. HRAs are again an option for qualifying small employers.
To be eligible, the small employer must have fewer than 50 employees and must not offer a group health plan to any of its employees.
The Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) must be subject to the following terms. No salary reduction contributions may be made (i.e., 100% employer-funded).Employer must receive proof of employee’s minimum essential coverage.Reimbursements must be for qualifying medical expenses.Reimbursements for any year cannot exceed $4,950 (or $10,000 for family coverage), which will be adjusted annually for inflation.Employer must offer the …
Question: A church gave a wedding gift of $1000 to a couple who are church members. No goods or services were provided by the couple in exchange for the gift. Is a Form 1099-MISC required? Answer: In the following answer, we assume that the couple are not employees of the church from whom the gift could not be viewed as compensation for their services. Also, the amount seems to be small enough to avoid any concerns of "private inurement."
Accordingly, no Form 1099-MISC is required. According to the 2017 IRS Instructions for Form 1099-MISC a Form 1099-MISC is only required for payment of goods or services. The requirements are as follows: "File Form 1099-MISC, Miscellaneous Income, for each
person to whom you have paid during the year: At least $10 in royalties (see the instructions for box 2) or
broker payments in lieu of dividends or tax-exempt interest
(see the instructions for box 8); At least $600 in: 1. Rents (box 1); 2. Services performed by someone who is not your
The U.S. Citizenship and Immigration Services released a revised Form I-9. All new hires after January 21, 2017, must complete the revised Form I-9. All prior released versions of Form I-9 will be invalid for new hires.
Employers are required to have a completed hard copy of Form I-9 on file for each employee. Current employees do not need to re-complete the revised form.