MinistryCPA - Corey A. Pfaffe, CPA, LLC

Question:   What should a church do to establish a Health Reimbursement Arrangement to pay for the pastor's personal health insurance premiums? Answer: In the current health insurance climate of high premiums and reduced benefits, many churches have decided to radically change their benefit packages. One of those solutions has been to establish a Health Reimbursement Arrangement (HRA) for their pastor. The following link to our MinistryCPA.org website seeks to provide helpful information.   Health Reimbursement Arrangement Help Further, many of these same churches have also qualified for the Credit for Small Employer Health Insurance Premiums. More information on this credit is also available within the following May 2011 blog post.   Small Business Health Care Tax Credit

Question: A teacher in a foreign country was provided with "free" housing and food. Does this teacher need to report this as income for tax purposes? Answer: Publication 525 says the following: "You do not include in your income the value of meals and lodging provided to you and your family by your employer at no charge if the following conditions are met. The meals are: 1. Furnished on the business premises of your employer, and 2. Furnished for the convenience of your employer. The lodging is: 1. Furnished on the business premises of your employer, 2. Furnished for the convenience of your employer, and 3. A condition of your employment. (You must accept it in order to be able to properly perform your duties.)" Publication 15 defines convenience of the employer as: "' For the convenience of the employer ' means you have a substantial business reason for providing the meals and lodging other than to provide additional compen...

Question 1: A church recently purchased a church building. Is the church required to begin depreciating the building? Answer 1: If a church uses full Generally Accepted Accounting Principles (GAAP) for its books, then fixed assets must be capitalized and depreciated. However, in many situations, it is our belief that many churches (especially small churches without accounting personnel) are best served by using the modified cash basis. This means that capital asset purchases are recorded as expenses, and not as depreciable assets. Expensing asset purchases allows the church’s congregation to more easily understand the financial situation of the church. This concept of expensing assets is discussed at greater length in the following blog posts: Church Accounting for Fixed Assets Churches Recording Depreciation For a MS-PowerPoint presentation on financial management for a church, follow the link provided below to MinistryCPA.org and click on Presentation: Church and Christian...

Questions: A missionary is going to be serving with a recognized U.S. missions organization. His home church is willing to receive funds from donors and then disburse them to him. What is the best way for the missionary’s home church to do this? Answer: Once the church has communicated its endorsement of a missionary, it will naturally encourage donors to contribute to his support. The checks to support him need to be made payable to the church and accountable to its control. The church then will disburse the funds. It is strongly recommended that the church dispense the funds directly to the missionary’s mission agency. The agency will handle all tax related issues and the church will have no further reporting requirements. The members of my Federal Taxation I class at Maranatha Baptist Bible College in Watertown, Wisconsin have taken on the challenge of study and research to answer posted questions. Mariya Bondarenko of Minnesota gets credit for this one.