MinistryCPA - Corey A. Pfaffe, CPA, LLC

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 ...

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. More information on Form I-9 can be found on the USCIS website .

Question : A non-profit organization recently asked if there is a change in the payroll reporting deadline for 2016. If yes, when do the Forms W-2 need to be filed? Answer : Yes, there is a change in the deadline for filing Forms W-2, W-3, and 1099-MISC. All forms must be submitted by January 31, 2017, for tax year 2016. The Forms W-2 and W-3 must be submitted to the Social Security Administration (SSA), and the Forms 1099-MISC must be submitted to the IRS. Form W-2, Wage and Tax Statement for employees  Form W-3, Wage and Tax Statement for employers Form 1099-MISC for reporting non-employee compensation to individuals or qualifying businesses (e.g., contractors, speakers, landlords, love offering recipients)  These changes to the Internal Revenue Code were a part of the PATH Act ,  Protecting Americans from Tax Hikes , Section 201, enacted on December 18, 2015. The IRS’s reminder provides more detailed information. The January 31 deadline has long appli...

The IRS issued 2017 standard mileage rates. These rates begin on January 1, 2017. The rates apply to the use of a car, van, pickup or panel truck. 53.5 cents per mile for business miles driven (down from 54 cents for 2016) 17 cents per mile driven for medical or moving purposes (down from 19 cents for 2016) 14 cents per mile driven in service of charitable organizations (no change from 2016) More information is available on the IRS’s webpage .

Notice : Individuals holding or acting as signatories on certain foreign bank accounts must file annual disclosures with the IRS. This includes a number of missionary clients of MinistryCPA. As of the 2017 filing season (year ended December 31, 2016), FinCEN Form 114, Report of Foreign Bank and Financial Accounts ( FBAR) will be due on April 15. According to  Act Sec. 2006(b)(11) of the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 , "The due date of FinCEN Report 114 (relating to Report of Foreign Bank and Financial Accounts) shall be April 15 with a maximum extension for a 6-month period ending on October 15 and with provision for an extension under rules similar to the rules in Treas. Reg. section 1.6081–5. For any taxpayer required to file such Form for the first time, any penalty for failure to timely request for, or file, an extension, may be waived by the Secretary."

Q uestion: A missionary couple (and their children) lives overseas for over half the year, while maintaining a home in the U.S.  Both are US citizens.  Do they qualify for the Earned Income Credit? Answer:   First, there are three potential credits that could be affected by residency status. Earned Income Credit (EIC) (refundable) - See  IRS Publication 596 Child Tax Credit (non-refundable) - Up to $1,000 per qualifying child Additional Child Tax Credit (refundable) - This credit is for certain individuals who get less than the full amount of the child tax credit. If the taxpayer did not live with his child in the United States for at least six months of the tax year, he cannot claim the EIC. But a taxpayer may be able to claim the Child Tax Credit or the Additional Child Tax Credit even though he did not live in the United States at least six months of the current tax year. It is often advantageous for a foreign missionary...

Question : One of a camp’s fulltime maintenance men is paid $600 per week ($31,200 per year). Some weeks he puts in less than 40 hours. But during camping season, he easily works 60 to 70 hours a week. Is the camp required to pay him overtime? Answer : As a general rule, the camp is not required to pay overtime if the employee meets two requirements. The employee meets the salary test and is paid on a salary basis of at least $913 per week (or $47,476 per year),* and  The employee meets the duties test of the executive, administrative, professional, or other exemption.** Because the maintenance man is paid $600 per week, he does not meet the salary test (No. 1 above). The camp is then required to do one of two options: Option A. Increase the employee’s weekly salary, or Option B. Reclassify the employee to a nonexempt employee, which means the employee will be paid on an hourly basis.  Option A is the simplest. The camp can just increase the maintenan...

Question: Can payments made to a health care sharing ministry (e.g., Samaritan Ministries, Christian Healthcare Ministries) which are exempt from the Affordable Care Act be deducted from income as a self-employed (SE) insurance deduction? Answer: First, to be technical, "health care sharing ministries" (IRS exemption D) provide participants an exception from Shared Responsibility Payments (ACA penalties), but don't connote other tax benefits. Second, a health care share ministry does not qualify as health insurance. One does not pay what the IRS considers to be premiums, but instead shares the health expenses of others. And according to IRS Pub 535 , in order for self-employed individuals to qualify for a SE insurance deductions they must be to pay premiums for qualifying health insurance. 

Question:   A new church filed for an employer identification number (EIN) recently. It received notification from the IRS about the EIN, stating that the church must file Form 944 by the following January deadline. The church has no non-ministerial staff members. Since income tax withholding is elective by ministers and none of the pastors has elected to request non-mandatory withholding is the church required to file Form 944 annually? Also, a quarterly Form 941 (rather than an annual Form 944) is required of some employers. Which IRS form, if any, should be filed? Answer: According to IRS Section 1402(c) and 3121(c), ministers are not subject to mandatory income tax withholding. Unless one or more ministerial employees request non-mandatory withholding, church employers with only ministerial employees do not need to file Form 941 or Form 944.  The IRS  Ministers Audit Technique Guide  explains in further deta...

Question: A church remodeled one of its buildings. One of the members coordinated the remodel, and the church paid individuals directly for their labor. According to the Internal Revenue Service's Form 1099-MISC instructions, one of the criteria is: "You made the payment for services in the course of your trade or business."  Since construction and remodeling is not the church's trade or business are the payments to these individuals reportable on Form 1099-MISC? Answer:   Yes the payments are reportable on Form 1099-MISC. According to  Form 1099-MISC instructions entitled " What is nonemployee compensation? If the following four conditions are met, you must generally report a payment as nonemployee compensation. You made the payment to someone who is not your employee.  You made the payment for services in the course of your trade or business (including government agencies and nonprofit organizations ).  You made the payment...