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How can employers provide tax-free education benefits to employees?

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Many organizations want to help employees continue their education, pursue professional certifications, or develop new skills. They are often surprised to learn that employer-paid tuition and education expenses are generally taxable compensation for the employee unless specific exceptions apply. The tax code allows for two primary programs  that organizations can implement to provide tax-free benefits to their employees. Understanding these options and when they should be used can help organizations support employee development while avoiding potential payroll issues. Educational Assistance Programs The first program is an educational assistance program (EAP) established under Section 127 of the Internal Revenue Code. This approach allows employers to provide up to $5,250 for each employee, per year, in educational assistance without the amount being included in the employee's taxable wages. One of the biggest benefits of this plan is that the education does not need to be rela...
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Basics of Ministerial Housing Allowance

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Who determines a minister's housing allowance and the fair rental value of a parsonage?  When beginning a new pastoral position there are often many questions that the pastor and the church may have. The most common questions are concerning housing allowance (Who determines the amount of the allowance and how is it designated?) or parsonage fair rental value (How does this determination affect compensation?). This post discusses the unique aspects of each of these pastoral housing methods, and answers some of the common questions. Housing Allowance  A housing allowance is a non-taxable benefit that is available only to ministers, and is received as a designated portion of the pastor's salary to pay for housing that he owns or rents himself. Other non-ministerial members of the church staff are not eligible. To establish a housing allowance, the minister must have the amount officially designated by the church's governing body, whether that is the deacon board or the finance...
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What is an EIN?

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Many sole proprietors start their businesses using their Social Security Number for tax and banking purposes. While this is allowed, it can expose personal information which is not ideal for small business owners. If you are a sole proprietor, applying for an Employer Identification Number (EIN) is a simple, free way to protect your privacy and give your business a more professional presence. Why Should Sole Proprietors have an EIN? An EIN is a unique nine-digit number given by the IRS to identify your business for tax purposes. It acts as the business's social security number and can be used on tax forms, bank accounts, and business licenses. Having an EIN allows business owners to protect their privacy by using the EIN in place of their social security number. An EIN can also simplify taxes and banking for your small business, as it is often required to open a business bank account or apply for business licenses. Even if you are the only person in your business, getting an EIN ...
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Wisconsin’s New Retirement Income Subtraction

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Wisconsin recently passed a new law that allows seniors to reduce their state taxable income by excluding a portion of their retirement income. Starting after December 31, 2024, individuals who are at least 67 years old by the end of the 2025 tax year can subtract up to $24,000 of eligible retirement income on their Wisconsin state 2025 income tax return when filing in early 2026. If you’re married filing jointly and both you and your spouse are 67 or older, you may subtract up to $48,000. Eligible retirement income includes payments from qualified retirement plans, such as a 401 (k), and Individual Retirement Accounts (IRA), as long as they aren’t already excluded under other state or federal rules. For part-year residents of Wisconsin, the amount you can subtract is a prorated amount. Nonresidents cannot claim this subtraction. This subtraction directly reduces your Wisconsin taxable income, but it does not reduce federal income.
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Financial Health Checkup for the Family

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Your family’s financial health can be diagnosed in myriad ways. At MinistryCPA, we have developed a financial health screening exercise that may lead to “prevention conversations”. Truthfully, it’s not all about financial health. But our Financial Health Questionnaire will likely lead to important chats that can prepare your family for a variety of life challenges. The instrument is a work-in-progress for us, so your feedback and suggestions will be most welcome. Follow this link ( Financial Health Questionnaire ) or access it online under Resources at www.Ministry.CPA .
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Operational Review Survey for Not-For-Profit Organizations

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 It’s not an audit . It’s not even a formal CPA review . But our Operational Review Survey can offer your not-for-profit organization a trial run at self-assessing the ways it handles 1) revenues, 2) expenditures, 3) financial and management reporting, and 4) compensation and other financial matters. Parts of the survey may be “Greek” to your organization or, even, irrelevant. We use it as a start to our process of consulting organizations that seek opportunities for self-improvement. The instrument is a work-in-progress for us, so your feedback and suggestions will be most welcome. Follow this link ( Operational Review Survey ) or access it online under Resources at www.Ministry.CPA .
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Donor Management Platforms

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Charitable contributions are the lifeblood for most not-for-profit organizations. Every two or three years, we seek to update our Donor Management Platform Recommendations resource. The latest iteration (March 2024) compares nine programs, their costs and very brief notes or comments. It also lists contact information. Of course, it is not exhaustive and is out-of-date the moment we upload it. But if your organization is exploring new options, it offers a start. The .pdf is a work-in-progress for us, so your feedback and suggestions will be most welcome. Follow this link ( Donor Management Platform Recommendations ) or access it online under Resources at www.Ministry.CPA .
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What are some of the basics of ministry finance?

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       What do I need to learn about church and Christian ministry finances?                Most of your formal training was in theology and meant to equip you for pulpit and one-on-one ministry, not organizational leadership. And there’s a lot to learn. Hopefully, as a 1 st time minister you’ll have good mentors both from more experienced ministers and from godly lay people. The Bible has much to say about financial matters. Study for yourself but also learn from others who have been devoted to its practical study. Offerings must be recorded and deposited. Expenses must be authorized and documented. Financial reports must be generated and communicated. Employees must be compensated and evaluated. Properties must be protected and maintained. Plans must be formed and implemented. Policies must be adopted and observed. See! It’s a lot! And many of these skills are not gained by “book learning.” They are learned by watching...
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How can my ministry expenses be covered by the church?

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     How can my ministry expenses be covered?                            Many ministers use their personal autos for ministry purposes. Their employers can reimburse these costs using a standard mileage rate published by the IRS. The per mile rate represents employees’ entire reimbursable cost other than highway tolls and parking tabs. If not covered by use of the ministries’ credit card, other costs can be reimbursed as well—business and travel meals, lodging, office supplies, and professional library purchases among them. Some ministries reimburse travel costs using per-diems published by the IRS. If employee business expenses are not reimbursed, the personal tax deduction benefit to the individual minister is severely limited. Non-taxable reimbursements after documentation is provided to the employer follows IRS rules for accountable plans. Non-taxable cash advances before expenses are in...
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What is the best retirement account for a Minister?

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       What are my options for retirement savings?                  Regardless of options, start now! You probably have learned about traditional and Roth IRAs. We have often found them well short of the benefits we will share here regarding Internal Revenue Code section 403(b) plans. These plans must be established by your employer (although you might need to be the initiator). They are funded in two ways—withholding from your paycheck at your option (called “elective deferrals”) and as initiated by the employer (matching or non-elective contributions). These contributions not only save income tax, but they also reduce the income you must report as subject to the 15.3% SECA tax. Further, at retirement with the cooperation of your church or Christian ministry the distributions to you can be tax-free to the extent of your qualified housing expenses. Many ministries also adopt what are often called “FICA alternative” be...
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