A recent graduate of the Intro to Church Finances course shares her experience with us today. Sign up for the Intro to Church Finances Course today! Cart closes on Monday, September 30th.

https://www.churchfinances.org/icfcourse

Hope to see you there! xo, Michelle Next Steps: 

Click below to learn more about me and my current offers

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Disclaimer: The information provided in the Church Finance and Minister Tax podcast is for general informational purposes only and is not intended as legal advice. The content discussed is based on personal opinions, experiences, and research performed and should not be considered a substitute for professional legal advice. Always consult with a qualified attorney or legal expert for advice regarding your specific situation. The host and guests of this podcast are not responsible for any actions taken based on the information provided. 

 

Link to sign up for the webinar

https://churchfinances.ck.page/6e9ec4fa85

 

xo, Michelle Next Steps: 

Click below to learn more about me and my current offers

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Enjoy a break from work, and learn a few of the strangest taxes in history.  xo, Michelle Next Steps: 

Click below to learn more about me and my current offers

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ISSUES:

• Whether petitioners are entitled to deduct job expenses and certain miscellaneous expenses totaling $37,535 for the 2014 tax year.

FACTS:

• Petitioners, MInister and his wife, resided in Oklahoma and filed a joint federal income tax return.

• Minister was a staff pastor, and his wife was a salesperson and later a teacher.

• They moved from Oklahoma to Florida for new job positions, incurring various expenses.

• Petitioners claimed unreimbursed employee expenses, including vehicle expenses, travel expenses, meals and entertainment, and other business expenses.

• Petitioners' records were lost, and they attempted to reconstruct their mileage log from memory.

Listen is to see what we can learn from this case.   xo, Michelle Next Steps: 

Click below to learn more about me and my current offers

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"In today's episode, we're exploring 'Ways to Reduce Taxable Income for Ministers.' Ministers often face unique tax challenges, balancing their roles as both employees and self-employed individuals. We'll uncover effective strategies to legally minimize taxable income, with a special focus on salary reduction agreements and the option to refuse part of one's salary. Whether you're a minister looking to optimize your tax situation or simply interested in the intricacies of clergy taxation, this episode is packed with valuable insights and practical advice. Let's get started!"

Episode Quote: "Today’s episode quote is by Amy Porterfield, a go-to expert for creating online and digital courses. Amy says, 'I don’t even realize how good it can get, but I’m willing to try and find out.' 

Introduction: Believe it or not, as part of your church’s finance team, one of the top priorities is to help minimize the tax liability of the minister’s income. Many ministers are not well-versed in the U.S. Tax Code System and are also not finance gurus. They are there to share the Gospel and equip the members for the work of the Gospel. It’s up to the church treasurer, bookkeeper, personnel team, finance team, or whatever title you hold within your church, to take care of the finances, including the minister's compensation package.

Dual Status Explanation: Ministers have a unique dual status for tax purposes: they are considered employees for income tax purposes and self-employed for Social Security tax purposes. This dual status opens up specific strategies for reducing taxable income.

Pre-Tax Deductions: A pre-tax deduction is an amount subtracted from an employee's (minister's) gross income before taxes are calculated. This reduces the minister’s taxable income, thereby lowering the amount of income and SECA tax owed. Common examples include contributions to retirement plans (such as 403(b) plans), health insurance premiums, housing allowance, and even charitable contributions.

Retirement Contributions:

• Utilizing tax-advantaged retirement plans like 403(b) and IRAs can significantly reduce taxable income.
• In 2024, the most an employee can contribute to a 403(b) account out of salary is $23,000.
• Housing allowances should typically be excluded from compensation for retirement plans due to their special tax treatment.
• Example: If a minister receives a $20,000 tax-free housing allowance, this amount is excluded from gross income and not included in the compensation for retirement plans.

 

Housing Allowance:

• Explanation of the housing allowance exclusion and how to maximize this benefit.

 

Charitable Contributions:

• Donating part of the salary back to the church can provide tax benefits.
• Example Scenario: Suppose you are a minister receiving a salary of $50,000. You decide to donate $10,000 back to the church.
  • Verify the church’s status as a qualified organization under IRC §170(c)(2).
  • Write a check for $10,000 and ensure it is deposited into the church's account.
  • Obtain documentation such as a receipt from the church.
  • Report the donation on your tax return, deducting it on Schedule A (Form 1040) as a charitable contribution.

Refusal to Accept Full Salary:

• Definition: Refusal to accept full salary means a minister voluntarily chooses not to take a portion of their agreed-upon salary, reducing taxable income.

• Legal Basis: Treasury Regulation § 1.451-2(a) outlines the concept of constructive receipt of income.

• Impact on Taxable Income: If a minister specifies where the money should go, it remains taxable. If the minister has no expectation or intent to withdraw the money later and gives no direction on its use, it can be considered non-taxable.

• Example:

  • Pastor Gary, with an annual salary of $50,000, decides to refuse $10,000 with no intent of drawing it later and no direction on its use, reducing his taxable income to $40,000.
  • If Pastor Gary specifies the $10,000 to go to a specific fund, it becomes taxable income.

Steps to Properly Document a Refusal to Accept Full Salary:

1. Written Agreement:
   • Create a written agreement stating the agreed-upon salary and the portion refused.
   • Include the effective date and duration.
2. Board Approval:
   • Obtain approval from the church board and record it in the meeting minutes.
3. Amend Employment Contract:
   • Amend the minister's contract if necessary and ensure both parties sign it.
4. Payroll Adjustments:
   • Adjust payroll records to reflect the reduced salary.
5. Maintain Records:
   • Keep copies of all related documents for IRS review.
6. Annual Review:
   • Review the arrangement annually to confirm continuation or make adjustments.

• Example:
  • Pastor Gary agrees to refuse $10,000 of his $50,000 salary, with a written agreement and board approval. Payroll is adjusted, and all documents are filed. This arrangement is reviewed annually.

Conclusion: By understanding and utilizing these strategies—such as salary reduction agreements, housing allowances, charitable contributions, and the refusal to accept full salary—ministers can effectively reduce their taxable income. Proper documentation and adherence to IRS regulations are crucial to ensure compliance and maximize tax benefits.

Thank you for tuning in! If you have any questions or want to learn more, stay tuned for our next episode.

xo, Michelle Next Steps:

Click here to check out how to contact me and sign up for some great FREE resources!

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Episode Date: June 18, 2024

Episode Summary: It is June and it is HOT! That means the year is halfway over, so now is the perfect time to conduct your mid-year review. In today's episode, we discuss the importance of performing a mid-year review for your church and the three key areas that require your attention: Budget, Contributions, and Minister Housing Allowance. Are you ready? Let’s go!

Quote of the Day: Today's quote comes from John Gordon & Alex Demcazk's book, “The Sale”: “A fool thinks only of how his decisions will impact him in the moment, but someone who has wisdom considers the long-term implications of his decisions.”

Episode Highlights:

1. Budget:

• Definition: An estimate of income and expenditures for a set period.
• Importance: Budgets are not set in stone and can be adjusted when needed. With major church activities often occurring in the third and fourth quarters, a mid-year review can help prepare for increased expenses.
• Action Steps:
  • Provide each department leader with a year-to-date copy of their budget and expenses.
  • Have leaders review their planning schedules for the remainder of the year to determine if they are on target or if adjustments are needed.
  • Follow your church's procedures for budget adjustments as outlined in your Financial Policy and Procedure guide.

2. Contributions:

• Mid-Year Contribution Statement: Send a mid-year contribution statement to donors, showing their giving year-to-date along with a Giving Supplement statement highlighting completed ministry projects.
• Methods: Contribution statements can be mailed, picked up at the church office, or accessed via an online giving portal.
• Communication: Include a sampling of ministry accomplishments in your church bulletin or pre-service slides to show the impact of donations.

3. Minister Housing Allowance:

• Understanding the Benefit: Review housing expenses year-to-date. Qualified ministers should take note of any unexpected expenses, such as storm damage or essential repairs.
• Key Point: Housing allowance adjustments must be proactive, not retroactive. Ensure the designation is made before paying for the expenses to include them in the housing allowance.

Call to Action:

• Take the time now to conduct your mid-year review focusing on your church's budget, contributions, and minister housing allowance.
• Share today's episode with other church leaders to help them understand the importance of these mid-year adjustments.

xo, Michelle Next Steps: Grab Your Freebies:

Six Steps to Doing Business God's Way    biz owners

A QuickStart Guide to Church Finances   everybody

Looking for a group of like-minded people that want to keep Jesus at the center of everything they do?

 Join the BEST FaceBook group for church finances at Church Bookkeeping and Clergy Tax Facebook Group

Need an extra hand with an immediate situation? Schedule a Consultation:

Schedule Consultation

The current scam going around for QuickBooks is discussed in today's episode.

I share the "red flags" to look for along with other helpful information.

QBES Care Support  888-702-5228

QB Support  800-446-4484

to report a scam security@intuit.com

xo, Michelle Next Steps: Grab Your Freebies:

Six Steps to Doing Business God's Way    biz owners

A QuickStart Guide to Church Finances   everybody

Looking for a group of like-minded people that want to keep Jesus at the center of everything they do?

 Join the BEST Facebook group for church finances at Church Bookkeeping and Clergy Tax Facebook Group

Need an extra hand with an immediate situation? Schedule a Consultation:

Schedule Consultation

 

Welcome to The Church Finance & Minister Tax Podcast! Are you ready to safeguard your church's financial health? Join us as we uncover common pitfalls and share tips for financial compliance. From avoiding the commingling of funds to reporting taxable income, get ready to empower your church with the knowledge it needs. Stay tuned for valuable insights coming up in our final part of the 3-part series on Navigating the IRS.

Episode Quote

"You are successful when you do what you need to do today." — Craig Groeschel, "Think Ahead"

Episode Highlights Common Pitfalls in Church Financial Compliance

1. Commingling Personal and Church Finances

   • Issue: Using church funds for personal expenses and reimbursing later blurs financial lines.
   • Consequences: Lack of transparency, serious tax implications.
   • Solution: Maintain separate personal and church accounts, revoke credit card privileges if misused, and ensure expenses are properly handled and reported.

2. Failure to Report Taxable Income

   • Issue: Ministers failing to report housing allowances and other taxable income accurately.
   • Consequences: Penalties and legal repercussions from the IRS.
   • Solution: Understand housing allowances are subject to Self-Employment Contributions Act (SECA) taxes, and consider voluntary Federal withholding by the church to aid compliance.

3. Importance of Professional Guidance

   • Issue: Unique complexities in church finances require specialized knowledge.
   • Solution: Seek professionals with expertise in nonprofit and church finances. Research and choose the right financial advisor, attend relevant training, and continuously educate church leaders on financial laws and best practices.

Special Announcement

• New Course: Intro to Church Finances
  • Details: A comprehensive beginners course to help church leaders understand financial management and compliance.
  • Join the Waitlist: Be the first to know when it launches by signing up at www.introtochurchfinances.com.

Summary

Maintaining financial compliance in church operations requires consistency, transparency, and a commitment to understanding and fulfilling the legal and tax obligations for the church. By avoiding common pitfalls such as commingling funds and failing to report taxable income, and seeking professional guidance, church leaders can safeguard their organization's financial integrity, allowing staff to focus on their spiritual missions without the stress of financial mismanagement.

Thank you for joining us for the final episode of our Navigating the IRS series. Stay tuned for more episodes on how to empower your church with sound financial practices.

 

This podcast is brought to you by Hallmark Tax Solutions, LLC, specializing in church financial compliance and minister tax services. Learn more at Hallmark Tax Solutions, LLC.

xo, Michelle Next Steps: Grab Your Freebies:

Six Steps to Doing Business God's Way    biz owners

A QuickStart Guide to Church Finances   everybody

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 Join the BEST Facebook group for church finances at Church Bookkeeping and Clergy Tax Facebook Group

Need an extra hand with an immediate situation? Schedule a Consultation:

Schedule Consultation

In today's episode I share about a recent consultation session I had and what I shared about not allowing others to walk over you even when you work at a church!

Listen in and hear the passion :-)

xo, Michelle Next Steps: Grab Your Freebies:

Six Steps to Doing Business God's Way    biz owners

A QuickStart Guide to Church Finances   everybody

Looking for a group of like-minded people that want to keep Jesus at the center of everything they do?

 Join the BEST FaceBook group for church finances at Church Bookkeeping and Clergy Tax Facebook Group

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Are you a church leader feeling overwhelmed by financial compliance? Stay tuned for part 2 of our series on Navigating the IRS maze: Tips for Church Financial Compliance. From maintaining accurate records to staying up-to-date with IRS filings, we've got you covered. Get ready to streamline your financial processes and gain peace of mind. I’m so happy to have you join me today!

As promised.... here is the IRS blurb you need to include in your contribution statements (or something similar)

• Statement that goods or services, if any, that the organization provided in return for the contribution consisted entirely of intangible religious benefits, if that was the case.

xo, Michelle Next Steps: Grab Your Freebies:

Six Steps to Doing Business God's Way    biz owners

A QuickStart Guide to Church Finances   everybody

Looking for a group of like-minded people that want to keep Jesus at the center of everything they do?

 Join the BEST FaceBook group for church finances at Church Bookkeeping and Clergy Tax Facebook Group

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Schedule Consultation

Feeling lost in a maze of IRS regulations?  Don't worry, you're not alone. Many church leaders and finance managers find themselves overwhelmed by the intricate web of rules and requirements. But fear not, because today, we're here to shed some light on the path to financial compliance. Today’s episode will kick off our 3 part series on Navigating the IRS Maze: Tips for Church Financial Compliance. I’m so happy to have you join me today!

 

xo

Michelle Next Steps: Grab Your Freebies:

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I'm thrilled to share that the Bookkeeping with a Purpose podcast is evolving to better support our church office crew and is rebranding to a new name “The Church & Minister Tax Podcast”. Same location, all the back episodes, just a new name and expanded focus. Alongside finance and tax tips, we're diving into admin tricks and organization hacks to make your life easier. With over three decades of office experience under my belt, I'm here to offer the best advice on running your office smoothly and ethically.

 

xo

Michelle R Brown, EA

Join our FREE FaceBook Community

Intro To Church Finances course waitlist

 

 

Webinar sign up page!  Year end Wrap up

I was recently asked what services a professional bookkeeper could offer to churches. 

 I share in today's episode the services I offer through my firm that I recommend other bookkeepers offer as well. 

xo, Michelle Next Steps: 

Click below to learn more about me and my current offers

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Disclaimer: The information provided in the Church Finance and Minister Tax podcast is for general informational purposes only and is not intended as legal advice. The content discussed is based on personal opinions, experiences, and research performed and should not be considered a substitute for professional legal advice. Always consult with a qualified attorney or legal expert for advice regarding your specific situation. The host and guests of this podcast are not responsible for any actions taken based on the information provided. 

 

NOTE: The Department of Labor (DOL) and the Internal Revenue Service (IRS) use different criteria for determining whether a worker is an employee or independent contractor, and the criteria serve different purposes.

The DOLs criteria are primarily used for determining eligibility for wage and hourly protections under the Fair Labor Standards Act (FLSA), ( which we covered in Ep 57) while the IRS’s 20-factor control test is used for tax purposes.

On January 9th, 2024, the DOL unveiled its final rule, which fundamentally alters how businesses/organizations (incl. churches) determine whether a worker is an employee or an independent contractor. Effective March 11th, 2024, this rule replaces the 2021 independent contractor rule issued under former President Donald Trump, introducing a six-factor test to evaluate worker classification.

 But what exactly are these six factors, and how do they impact churches and workers alike? We break it down in this episode.

xo, Michelle Next Steps: Grab Your Freebies:

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 Join the BEST FaceBook group for church finances at Church Bookkeeping and Clergy Tax Facebook Group

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Need an extra hand with an immediate situation? Schedule a Consultation:

Schedule Consultation

Segment 1: Tax Realities

• Ministers Pay Taxes: Dispelling myths.
• Legal Truth: Courts reject tax exemption claims.
• Cautionary Note: Risks of tax evasion.

Segment 2: Ministerial Taxes 101

• Tax Status: Ministers are self-employed.
• Who's Qualified: Active licensed, ordained, or commissioned ministers.
• Tax Responsibilities: Pay taxes through withholding or estimated payments.

Segment 3: Compliance & Penalties

• Filing Rules: Ministers must file if earning over $400.
• Accuracy Matters: Penalties for wrong tax reporting.
• Get Help: Advising professional tax assistance.

Segment 4: Church Payroll Taxes

• Get FEIN: Federal Employer Identification Number is essential.
• How to Get FEIN: Fill Form SS-4.
• EFTPS Registration: Needed for tax payments.

Segment 5: Payroll Tax Basics

• Federal Income Tax
• Medicare Tax
• Social Security Tax
• Unemployment Taxes for Churches.

xo, Michelle Next Steps: Grab Your Freebies:

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A QuickStart Guide to Church Finances   everybody

Looking for a group of like-minded people that want to keep Jesus at the center of everything they do?

 Join the BEST FaceBook group for church finances at Church Bookkeeping and Clergy Tax Facebook Group

If you’re a church staff member or volunteer looking to serve your local church with excellence, check out my membership group The Bookkeepers Inner Circle @ www.bookkeepersInnerCircle.com

Need an extra hand with an immediate situation? Schedule a Consultation:

Schedule Consultation

 

Tax season is upon us, and with it comes the need for proper documentation. Improper donation receipts can cause headaches for both donors and organizations. In this episode, we'll dive into the essential elements of a donation acknowledgment letter to ensure compliance with IRS standards.

Main Content:

• Understanding IRS Requirements:

• Explaining IRS guidelines for donors, including the need for timely written communication and recordkeeping.
• Highlighting the responsibility of donors to obtain proper documentation for charitable contributions.

• Church's Responsibilities:

• Outlining the essential components of a donation acknowledgement letter, as specified by the IRS.
• Emphasizing the importance of timely and accurate acknowledgement for contributions of $250 or more.

• Crafting the Letter:

• Providing a step-by-step guide for structuring a donation acknowledgement letter.
• Discussing the format, content, and personalization techniques to enhance donor engagement.

Conclusion: As we wrap up, remember the significance of accurate recordkeeping and timely acknowledgement in fostering trust and compliance. By following these guidelines, you can ensure that your organization meets IRS standards and cultivates strong relationships with donors.

See links below that were referenced in this episode.

IRS Publication 1771

IRS Publication 526

xo, Michelle Next Steps: Grab Your Freebies:

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Looking for a group of like-minded people that want to keep Jesus at the center of everything they do?

 

Join the BEST FaceBook group for church finances at Church Bookkeeping and Clergy Tax Facebook Group

 

If you’re a church staff member or volunteer looking to serve your local church with excellence, check out my membership group The Bookkeepers Inner Circle @ www.bookkeepersInnerCircle.com

Need an extra hand with an immediate situation? Schedule a Consultation:

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Introduction:

• Welcome to episode 57 of the Bookkeeping with a Purpose podcast!
• Exploring the complexities of federal regulations, particularly regarding church employees and overtime rules.
• I stumbled upon something fascinating recently, and you know me, I can’t keep cool discoveries to myself. So, buckle up for a journey into the world of church finance regulations!
• Federal regulations often lack clarity, especially when it comes to topics like church employees and overtime rules.
• Sparked by a question about a past episode I recorded on church employees and overtime rules, recent research uncovered new insights, prompting a deeper dive into the subject. Spoiler alert: it’s not as straightforward as it seems.

Segment 1: Quote of the Day

• Drawing inspiration from Greek philosopher Aristotle: “We are what we repeatedly do. Excellence then, is not an act, but a habit.”

Segment 2: Understanding Fact Sheet #14A

• Exploring Fact Sheet #14A from the Wage & Hour Division of the US Department of Labor.
• Highlighting protections offered by the Fair Labor Standards Act (FLSA), including minimum wage, overtime regulations, record-keeping requirements, and child labor standards.

Segment 3: Coverage Criteria

• Diving into two key ways employees are covered under the FLSA.
  • Enterprise Coverage: Employees of businesses generating at least $500,000 in annual sales revenue, with exceptions for non-profit organizations unless engaged in qualifying commercial activities.
  • Individual Coverage: Employees engaged in interstate commerce or closely-related processes essential to such production.

Segment 4: Application to Church Employees

• Demonstrating how church employees may fall under FLSA protections, particularly through involvement in interstate commerce-related activities.
• Debunking common misconceptions and emphasizing compliance with overtime regulations, minimum wage rules, record-keeping requirements, and child labor standards.

Segment 5: Volunteer Guidelines

• Clarifying volunteer regulations outlined in Fact Sheet #14A:
  • Restrictions on volunteering in commercial activities.
  • Prohibitions against displacing paid employees with volunteers.
  • Limitations on paid employees volunteering for similar services performed in their job roles.

Episode Support Links

Fact Sheet #14A: Non-Profit Organizations and the Fair Labor Standards Act (FLSA)

xo, Michelle Next Steps: Grab Your Freebies: 6 Step Process to Doing Business God's Way    biz owners FREE QuickStart Guide to Church Finances   everybody

Looking for a group of like-minded people that want to keep Jesus at the center of everything they do?

 

Join the BEST FaceBook group for church finances at Church Bookkeeping & Clergy Tax FaceBook Group

 

If you’re a church staff member or volunteer looking to serve your local church with excellence, check out my membership group The Bookkeepers Inner Circle @ Bookkeepers Inner Circle

Need an extra hand with an immediate situation? Schedule a Consultation:

Consultation   

In Episode 42 I talked to you about 3 steps to help you create a sound budget. In today's episode I want to help you take the next step in the budgeting process - ensuring that every program you created a budget line item for is carried out with excellence so that you can actually stay within that budget! Listen in to see how you can continue to honor God in the budget process.

 

xo, Michelle Next Steps: Grab Your Freebies:

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Looking for a group of like-minded people that want to keep Jesus at the center of everything they do?

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Direct from the IRS website:

A minister's housing allowance (sometimes called a parsonage allowance or a rental allowance) is excludable from gross income for income tax purposes but not for self-employment tax purposes.

If you receive as part of your salary (for services as a minister) an amount officially designated (in advance of payment) as a housing allowance, and the amount isn’t more than reasonable pay for your services, you can exclude from gross income the lesser of the following amounts:

• the amount officially designated (in advance of payment) as a housing allowance;
• the amount actually used to provide or rent a home; or
• the fair market rental value of the home (including furnishings, utilities, garage, etc.).

The payments officially designated as a housing allowance must be used in the year received.

Include any amount of the allowance that you can't exclude as wages on line 1a of Form 1040, U.S. Individual Income Tax Return or Form 1040-SR, U.S. Tax Return for Seniors. Enter “Excess allowance” and the amount on the dotted line next to line 1a.

If your congregation furnishes housing in kind as pay for your services as a minister instead of a housing allowance, you may exclude the fair market rental value of the housing from income, but you must include the fair market rental value of the housing in net earnings from self-employment for self-employment tax purposes.

For more information on a minister’s housing allowance, refer to Publication 517, Social Security and Other Information for Members of the Clergy and Religious Workers.

For information on earnings for clergy and reporting of self-employment tax, refer to Tax Topic 417, Earnings for Clergy.

xo, Michelle Next Steps: Grab Your Freebies:

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Looking for a group of like-minded people that want to keep Jesus at the center of everything they do?

Join the BEST FaceBook group for church finances at https://www.facebook.com/groups/churchbookkeepingandclergytax

 

If you’re a church staff member or volunteer looking to serve your local church with excellence, check out my membership group The Bookkeepers Inner Circle @ www.bookkeepersInnerCircle.com

Need an extra hand with an immediate situation? Schedule a Consultation:

https://churchfinances.org/consult      

1099-NEC or 1099-Misc?

Knowing which form to use can be confusing.

In today's episode I go over 

1. who should receive a Form 1099

2. which Form 1099 do you send

3. special circumstances that determine which form to use

4. e-filing requirements

5. filing deadlines

I hope this helps!

xo, Michelle Next Steps: Grab Your Freebies:

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Looking for a group of like-minded people that want to keep Jesus at the center of everything they do?

 

Join the BEST FaceBook group for church finances at https://www.facebook.com/groups/churchbookkeepingandclergytax

 

If you’re a church staff member or volunteer looking to serve your local church with excellence, check out my membership group The Bookkeepers Inner Circle @ www.bookkeepersInnerCircle.com

Need an extra hand with an immediate situation? Schedule a Consultation:

https://churchfinances.org/consult      

In today's episode we go over how to properly fill out your Ministers W-2, the new mileage rate for 2024 and 1099 filing requirements and deadlines. xo, Michelle Next Steps: Grab Your Freebies:

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Looking for a group of like-minded people that want to keep Jesus at the center of everything they do?

 

Join the BEST FaceBook group for church finances at https://www.facebook.com/groups/churchbookkeepingandclergytax

 

If you’re a church staff member or volunteer looking to serve your local church with excellence, check out my membership group The Bookkeepers Inner Circle @ www.bookkeepersInnerCircle.com

Need an extra hand with an immediate situation? Schedule a Consultation:

https://churchfinances.org/consult      

The IRS has announced the tax opening date for 2024.

In today's episode I share a list of documents you need to start gathering together to help make the tax prep process smoother for you and your tax preparer.

This week's Courageous Obedience Moment is to look for God and how His character is revealed in Scripture instead of reading the Bible with the intent of looking for what the Word has to say to you. Look for God!

xo, Michelle Next Steps: Grab Your Freebies:

https://churchfinances.ck.page/6steps    biz owners

https://churchfinances.ck.page/guide   everybody

Looking for a group of like-minded people that want to keep Jesus at the center of everything they do?

 

Join the BEST FaceBook group for church finances at https://www.facebook.com/groups/churchbookkeepingandclergytax

 

If you’re a church staff member or volunteer looking to serve your local church with excellence, check out my membership group The Bookkeepers Inner Circle @ www.bookkeepersInnerCircle.com

Need an extra helping hand with an immediate situation? Schedule a Consultation:

https://churchfinances.org/consult     

IRS blurb for your annual contribution statements

" Pursuant to Internal Revenue Code requirements for substantiation of charitable deductions, no goods or services were provided in return for the Tax Deductible contributions"

For QuickBooks Desktop:

" Unless otherwise noted, the only good or services provided are intangible religious benefits"

 

Records that should be retained for 5 years:

• Offering Envelopes (unless you put a disclaimer advising members to request any necessary changes within a specified time period on the annual statement)
• Annual contribution statements
• Written acknowledgment of charitable contributions
• Written verification of participation in short-term mission projects approved by the church
• Substantiation of business related expenses that are a part of an Accountable Reimbursement Plan
• Minister job descriptions and Housing designations
• Copies of IRS forms (ex. 941, W-2's, 990-T, W-4's, 1099's)

Records to keep until Jesus comes back :-)

• Any and all legal documents for the church (incl. Articles of Incorporation, Constitution & Bylaws, Tax exemption records)
• Church Policies, Job descriptions, Compensation Package data, Accountable Reimbursement Plans & Safety Net Housing Allowance docs if you have one
• Correspondence from the taxing authorities incl. IRS, State and local authorities (incl. Form 1023 application, SS-4 EIN number, Form 8274)

Courageous Obedience Moment:

From Calm Your Anxiety by Robert J. Morgan

"Equipping yourself with Scriptures will help your mind be trained to move from panic to peace, from worry to worship, and from anxiety to confident trust. Identify three scriptures that will help you make these movements. Recite them each day until you've memorized them."

Be blessed my friend.

xo, Michelle Next Steps: Grab Your Freebies:

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Looking for a group of like-minded people that want to keep Jesus at the center of everything they do?

You can join the BEST FaceBook group for churches at https://www.facebook.com/groups/churchbookkeepingandclergytax

If you’re a church staff member or volunteer looking to serve your local church with excellence, check out my membership group The Bookkeepers Inner Circle @ www.bookkeepersInnerCircle.com

Schedule a Consultation:

https://churchfinances.org/consult      

New Harassment Law from the EEOC is discussed to make you aware of who it affects in your church and how you should respond.

https://www.eeoc.gov/laws/guidance/enforcement-guidance-harassment-workplace

xo, Michelle Next Steps: 

Click below to learn more about me and my current offers

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Disclaimer: The information provided in the Church Finance and Minister Tax podcast is for general informational purposes only and is not intended as legal advice. The content discussed is based on personal opinions, experiences, and research performed and should not be considered a substitute for professional legal advice. Always consult with a qualified attorney or legal expert for advice regarding your specific situation. The host and guests of this podcast are not responsible for any actions taken based on the information provided. 

 

With the end of year upon us, let's take the time to review what worked well this year, and what didn't. Then take steps to make next year even better!

Here are some links to resources that can help increase your knowledge in church finances.

www.thechurchnetwork.com

www.churchlawandtax.com

www.bookkeepersinnercircle.com

xo, Michelle Next Steps: Grab Your Freebies:

https://churchfinances.ck.page/6steps    biz owners

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End of year special -- ONLY $10/month! Special pricing ends 12.31.23

Looking for a group of like-minded people that want to keep Jesus at the center of everything they do?

If you’re a church staff member or volunteer looking to serve your local church with excellence, check out my membership group The Bookkeepers Inner Circle @ www.bookkeepersInnerCircle.com

Schedule a Consultation:

https://churchfinances.org/consult       

Communication. You hear it mentioned when you're in a relationship. But communication is also vital to your business success. Today I talk about 3 areas of communication that you need to pay attention to in order to experience the success you desire in your service to the local church.

I open with a story about a remarkable lady who works in her church office and has some unique challenges. 

I hope this episode blesses you.

xo, Michelle Next Steps: Grab Your Freebies:

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Intuit is always changing things, and not always for the best. Many small and medium size churches still use QB Desktop and it has been my software of choice for the last 27 years. Intuit made the announcement this week that they will no longer make the Desktop version available to new customers effective July 31, 2024. As QB Pro Advisors and bookkeeping professionals, we knew it was coming, we just didn't know when. Current subscribers CAN still keep your desktop subscription, you just have to pay an annual fee. The days of purchasing the software and it being a "one and done" are gone.   xo, Michelle

michelle@churchfinances.org

Next Steps: Grab Your Freebies:

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Looking for a group of like-minded people that want to keep Jesus at the center of everything they do?

If you’re a looking to serve your local church with excellence, check out my membership group The Bookkeepers Inner Circle @ www.bookkeepersInnerCircle.com

Schedule a Consultation:

https://churchfinances.org/consult       

 

1. Dual tax status = EE for income tax purposes, but considered SE for FICA tax purposes
2. Minister should make ETP throughout the year to help pay for the SE taxes that will be due on their income to avoid underpayment penalties if they owe over $1,000 tax liability
3. EE vs IC     IRS link   Publication 1779 download
4. HA is exempt from Federal Income Tax, but IS subject to SECA and has limitations on the amount that can be designated
5. Business expenses must be allocated between taxable and nontaxable income (calculated on the 3 Clergy worksheets on the ministers tax return)
6. Special rules apply to retired ministers who receive any of their retirement benefits as HA 
7. Form 4361 explanation (filed within first 2 years of earning minister earnings of $400 or more) - NON revocable
8. Due to TCJA until 2025 the Misc. Itemized deduction subject to 2% AGI limitation is not allowed. However, if the minister has unreimbursed job expenses, he can subtract them from SE earnings on Worksheet 3 of the Clergy Worksheets in the minister's 1040 tax return
9. Gifts given to active ministers may actually be compensation for services rendered and therefore included as taxable income.

I hope this information is helpful to you.

xo, Michelle Next Steps: Grab Your Freebies:

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Looking for a group of like-minded people that want to keep Jesus at the center of everything they do?

 

If you’re a business owner looking for help serving your clients with excellence, check out my Mastermind program The Bookkeepers Next Level @ www.bookkeepersNextLevel.com

 

If you’re a church staff member or volunteer looking to serve your local church with excellence, check out my membership group The Bookkeepers Inner Circle @ www.bookkeepersInnerCircle.com

Schedule a Consultation:

https://churchfinances.org/consult       

 

 

Regardless of what's going on in your life or your business, there is ALWAYS something to be thankful for. 

In today's episode, I go over some items that we should all be thankful for this year.

Thanks for taking a listen and I hope you have a very Happy Thanksgiving!

xo, Michelle Next Steps: Grab Your Freebies:

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Join the FB Community: www.facebook.com/groups/churchbookkeepingandclergytax     

1. Check your W-4 information - make sure have all required information on all current and past 2023 EE’s and update if needed
   1. This is also a good time to update your EE files with any new information or missing info incl. I-9’s
2. Beginning January 2024, the IRS has issued final regulations for filing paper return and you now have to file electronically if you have only 10 or more W-2 OR 1099’s to file.
   1. W-2’s SSA.gov/BSO = you will have to create a new login through either ID.Me or  Login.gov
   2. I use track1099 to file my 1099 forms  
      1. Can either email or print and mail to contractors
      2. Make a list of all your contractors and make sure you have the info needed 

If you're ready to get serious about learning church finances, you can join the Bookkeepers Inner Circle which is my paid private coaching community for all things church finances where you will have access to me each month for a LIVE Q & A session along with monthly training videos. To check it out go to, www.bookkeepersinnercircle.com and join today!  xo, Michelle Next Steps: Grab Your Freebies:

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Join the FB Community:

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Today we will be talking about things we want to accomplish in this last quarter. We will talk about 4 tasks I want you to do:

1. Tell your members about donation deadlines

2. Understand the $250 rule

3. Locate your 501c3 letter

4. Review your insurance policy

I hope this gets you off to a good start on checking off those year-end tasks.

As always, thanks for sharing your time with me. 

xo, Michelle Next Steps: Grab Your Freebies:

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In todays episode I walk you through three reasons why generally all love offerings to staff members are considered taxable income by the IRS. 

It can be frustrating, but the IRS is clear that "income from whatever source derived" is taxable. 

Take a listen to see what else the IRS has to say on the topic.

As always, thanks for taking time to listen. I truly appreciate it!

xo, Michelle Next Steps: Grab Your Freebies:

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https://churchfinances.ck.page/guide   everybody Schedule a Consultation:

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Join the FB Community:

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Wahoo! We are back in podcast land and I am SO happy! Thanks for your patience while I worked through a few obstacles. 

Today we are talking about steps to help you in the budgeting process.

They are:

1. Identify & Evaluate the programs and activities most important to your church

2. Define your Church Compensation Philosophy

3. Give your best estimate of the funds you will need to accomplish your mission

As always, I thank you SO much for spending some of your valuable time with me. I look forward to talking with you again soon!

 

xo, Michelle Next Steps: Grab Your Freebies:

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Knowing who qualifies for salary and who doesn't is an important process you need to know for your church. Listen to todays episode to find out who can be on salary and who can't. xo, Michelle Next Steps: Grab Your Freebies:

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With the newest updates in the FLSA and salary requirements, there have been questions about how the State labor laws come into play. In today's episode, we discuss a couple of the sections of labor law and how each is affected. 

I am only providing you with a  summary of research that I have done and am NOT providing legal advice. 

Take a listen.  xo, Michelle Next Steps: 

Click below to learn more about me and my current offers

https://my.linkpod.site/MBrownEA

Understanding the Ministerial Exception can help clarify how to properly pay your church employees. Take a listen! xo, Michelle Next Steps: Grab Your Freebies:

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Today we touch on Housing Allowance, Reasonable Compensation and Benefits.    xo, Michelle Next Steps: Grab Your Freebies:

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I am SO excited to be back teaching church finances this week! In addition to discussing the foundation of church finances and managing contributions and donations, we will also hear about a recent Supreme Court case that is relevant in the church world and to Christians in general. Grab your notebook and pen and let's get ready to learn! xo, Michelle Next Steps: Grab Your Freebies:

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Join the FB Community:

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Thank you for joining me as I interviewed my podcast coach!

In this episode Ms. Stefanie Gass shares her 7 step Spiritual Battle plan with us and even provides a workbook to help you! Check out the link below. 

7-STEP SPIRITUAL BATTLE PLAN

www.stefaniegass.com/battleplan

To join my Private coaching Community The Bookkeepers Inner Circle visit www.bookkeepersinnercircle.com xo, Michelle Next Steps: Grab Your Freebies:

https://churchfinances.ck.page/6steps    biz owners

https://churchfinances.ck.page/guide   everybody Schedule a Consultation:

https://churchfinances.org/bizconsult    biz owners

 

https://churchfinances.org/consult       church staff/volunteer

Join the FB Community:

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Thank you for listening to today's episode! I LOVE books and the Lord has used them mightily in my life to take me from a very lonely and insecure girl, to the strong and mostly confident woman and entrepreneur that I am now. 

Today I discuss the Top 5 books that have helped me on my journey and I hope they will be helpful to you as well. 

Also.....

I announce my NEW private coaching community called The Bookkeeper Inner Circle! I am SOOOOO excited about this! I seriously wish there was something like this available when I started in church finances.

To find out how you can go from confused and frustrated with church finances, to becoming the confident and capable finance expert you were meant to be, check out the group at www.bookkeepersinnercircle.com and join today! You only have 7 days to join as I will close the doors on August 1st so I can give my full attention to the hungry learners who sign up this week.  

Again, go to www.bookkeeperinnercircle.com to get more information and to sign up!

I hope to see you in the Bookkeepers Inner Circle soon!  xo, Michelle Next Steps: Grab Your Freebies:

https://churchfinances.ck.page/6steps    biz owners

https://churchfinances.ck.page/guide   everybody Schedule a Consultation:

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Join the FB Community: www.facebook.com/groups/churchbookkeepingandclergytax     

In order to understand the Word of God, sometimes a little extra help is needed. 

Bible reference books are an invaluable help in accomplishing this. 

In today's episode, I give you a brief summary of the different kinds of resources available to help you choose which one is the right fit for you.

I hope this blesses you!

xo, Michelle Next Steps: Grab Your Freebies:

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Join the FB Community:

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Which Bible is the right one for you?

The one that you will actually read and can understand. It does you no good to have a collection of Bibles that simply collect dust.

Furthermore, NO ONE can tell you which translation is the best because no one else has your brain, your attention span, your comprehension.

The point is to pick one. Read it. Meditate on it. Apply the truths to your life and allow Holy Spirit to transform your mind and your life through the power of the written Word.

Take a listen and also learn about the newest specialty Bible, the Filament Bible.

If you missed last weeks download on Bible Translations, you can get it here at www.churchfinances.org/translations

xo, Michelle Next Steps: Grab Your Freebies:

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Join the FB Community:

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1. Today is the 1st episode in my Summer Series titled "Bible Basics for Everyone" and today’s topic is Bible Translations. As you may know, in addition to teaching church finances, I also own a Christian bookstore and we have people come in almost on a daily basis that are looking for their first Bible and when we ask what translation they are looking for… they say “English”. So, I know that this is a topic that can be helpful to many. Even if you’re a Bible aficionado, you may hear something today that you can share with others. I’ll provide you a link later on in the episode to get a copy of the information shared because there is just TOO much good info to try and take notes today.

As promised, here are the links from today's episode:

https://www.gotquestions.org/Passion-Translation.html

Mike Winger Series on the TPT

https://www.youtube.com/playlist?list=PLZ3iRMLYFlHvXha4rjCj1Po0WLQc_jGGW

FREEBIE

FREE Bible Translations pdf

xo, Michelle Next Steps: Grab Your Freebies:

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Join the FB Community:

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Today we are talking with Pastor Chris about his recent graduation from Southern Seminary and how they prepared him for the new tax status he gained when becoming a pastor. You may find this interesting.  xo, Michelle Next Steps: Grab Your Freebies:

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Join the FB Community:

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Today I share what God has laid on my heart for a Summer Series and other podcast news/updates. 

Thanks for listening!

xo, Michelle Next Steps: Grab Your Freebies:

https://churchfinances.ck.page/6steps    biz owners

https://churchfinances.ck.page/guide   everybody Schedule a Consultation:

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Join the FB Community:

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Here is my disclaimer… I am NOT providing legal advice here, I am simply telling you what I have learned so far about the new rules going into effect. 

xo, Michelle Next Steps: 

Click below to learn more about me and my current offers

https://my.linkpod.site/MBrownEA

 

Since it’s summertime and the year is ½ over, in today’s episode we are going to be talking about performing a mid-year review for your church and the three areas I think you need to take a look at.

Just like many businesses do an annual performance review on their employees, churches should also do a mid-year review on three important areas that may need to be adjusted:

1. Budget
2. Minister Housing Allowance
3. Contributions

Let’s take a look at each one and why you should take a look at these now instead of at the end of the year.

xo, Michelle Next Steps: Grab Your Freebies:

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https://churchfinances.org/bizconsult    biz owners

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Join the FB Community:

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In this episode, we will discuss the three main points that play a crucial role in ensuring client satisfaction. Yes – it is possible to have happy clients 😉 By listening to your clients, solving their problems, and leading them toward success, you can create long-lasting relationships and drive positive outcomes.

Episode Outline:

1. The Power of Listening to Your Clients

a. Understanding the Importance of Active Listening

b. Techniques for Active Listening

c. Building Trust and Empathy through Listening

 

2. Solving Client Problems: Going Above and Beyond

a. Identifying and Prioritizing Client Needs

b. Implementing Effective Problem-Solving Strategies

c. Communicating Solutions Clearly and Timely

 

3. Leading Clients Toward Success

a. Being a Trusted Advisor and Strategic Partner

b. Setting Realistic Expectations

c. Providing Ongoing Guidance and Support

Remember, happy clients are the cornerstone of a successful business.

xo, Michelle Next Steps: Grab Your Freebies:

https://churchfinances.ck.page/6steps    biz owners

https://churchfinances.ck.page/guide   everybody Schedule a Consultation:

https://churchfinances.org/bizconsult    biz owners

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Join the FB Community: www.facebook.com/groups/churchbookkeepingandclergytax     

 

Benevolence Funds, specifically, how do you handle them when collecting for a specific person in need will be discussed in today's episode.

The IRS has set guidelines regarding this situation and we will cover those today including Revenue Ruling 62-113.

We discussed the IRS cap on benevolence being given before it becomes taxable to the receiver in 2023.

We also touched upon the fact that ANY benevolence given to employees or members of the employees family is not considered true benevolence and IS reported as taxable income.

Another point we covered was making sure that your benevolence procedures are followed in compliance with your official Benevolence policy.

Additionally, we verified that donations earmarked for an individual are NOT tax deductible to the donor UNLESS there is an understanding that all donations received will be used by the church in a manner that is consistent with their purpose and mission and may be used for a different purpose should the church decide. The church must retain total control of how the funds are spent, regardless of the donor's request.

Take a listen to learn all the details! xo, Michelle Next Steps: Grab Your Freebies:

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Join the FB Community: www.facebook.com/groups/churchbookkeepingandclergytax     

 

Knowing who you are, what you're best at, and what you enjoy doing the most will help you to define who your business will serve. We will go over 6 things that will help you define the pillars of your business and how you will learn, market and grow your business. 

Take a listen and I hope this blesses you and helps you to define the direction you want to go.

xo, Michelle Next Steps: Grab Your Freebies:

https://churchfinances.ck.page/6steps    biz owners

https://churchfinances.ck.page/guide   everybody Schedule a Consultation:

https://churchfinances.org/bizconsult    biz owners

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Join the FB Community: www.facebook.com/groups/churchbookkeepingandclergytax