MinistryCPA - Corey A. Pfaffe, CPA, LLC

Question: Our church is a non-profit incorporation and we have founded an affiliated church. What is the status for donations made to the affiliation church? Answer: I'm guessing that the question relates to a church planting activity by one local church that has identified a geographic area needing a local church. The established congregation (the "mother" church) aids a group of people wishing to start a new church (the "daughter" church) similar to it. Typically, the mother church provides financial oversight including paying initial ministerial salaries or renting facilities. Donations are collected by the daughter church, but managed by the mother church. Offerings are deposited into a mother church bank account, but accounted for as gifts designated to the new ministry. Contribution records and reports are managed by the mother church. Donors to the daughter church receive year-end giving statements from the mother church. Accordingly, the tax-dedu...

Question: We’ ve heard that churches and tax-exempt organizations may qualify for the Small Business Health Care Tax Credit. Is this true? Answer: Yes, many churches and tax-exempt organizations qualify for the Health Care Tax Credit. If you can agree to all statements listed below, then your church (or other organization) is likely to qualify for the 2010 credit. 1. You paid at least 50% of your employee’s health insurance premiums. 2. You have fewer than 25 full-time equivalent employees during 2010 (you may have more than 25 employees if you have some part time employees). 3. You paid less than $50,000 in average annual wages—but don’t include your minister’s wages in the calculation. 4. You paid the following payroll taxes in 2010: Federal income taxes or Medicare taxes. Eligible, tax-exempt small employers may claim the refundable credit by filing Form 990-T and Form 8941. For more information, see the Instructions for Form 8941:  Form 8941 Instructions