Your First Meeting of the Year is the Most Important

The IRS allows several tax benefits for ministers; however, they must be proposed and approved during your first board meeting of the year in order to take full advantage of them. They all fall under a Salary & Compensation Policy. Here are 3 very significant items that impact ministers tax liability:

  • Salary & Benefits
    • There must be either a contract or offer letter detailing exactly what the pastor/staff minister is to receive as salary & compensation
    • The pastor/staff minister must sign agreeing to the terms of the salary & benefits
    • This should be reviewed annually during the first meeting of each year
  • Housing Allowance Designation
    • The pastor/staff minister can deduct all expected expenses they will incur during the year from their gross salary; to include mortgage/rent, property tax, insurance, utility bills, maintenance, upgrades in furniture, appliances, fixtures, landscape etc.
    • If a parsonage is provided and/or utilities paid for by the church/ministry, then only additional expenses incurred can be designated.
  • Medical Reimbursement
    • ALL medical related expenses paid out by the pastor/staff minister are reimbursable. These are actual paid expenses for medical services provided.

There are more details on these items, so either refer to your accountant, attorney, the IRS publications or contact the district office for supporting information.

 

 

 

Do You Know The $250 Rule?

As your church prepares to gather all donor contribution information for 2015 to meet the January 31st, 2016 mail out deadline, there’s one important question to ask if you are in compliance with the IRS. “Do You Know the $250 Rule?”

The $250 rule simply states that for each individual donation from a single donor that is equal to or greater than $250 a separate receipt for each donation is required. If you have a donor in your church who typically gives $250 or more each time they give, they must receive a separate receipt for each $250 or more donation. You’re probably freaking out right now because this rule most likely hasn’t been practiced in your church last year.

First off, take a deep breath because there is an alternate way to comply with this rule. For those donors who did give any/all single donations of $250 or more for 2015, you can give them an itemized listing of ALL there charitable contributions for 2015. Typically, churches have just given a summary total of giving for each donor. This is no longer acceptable to the IRS for the donor to receive tax deductible credit on their tax return. They must receive a receipt from the charitable organization that reflects every contribution, especially all that are $250 or more.

You can get more information from the IRS site at https://www.irs.gov/Charities-&-Non-Profits/Charitable-Organizations/Charitable-Contributions-Written-Acknowledgments, or contact the district office via email: info@swtx-pcg.org, or phone: (512) 353-8595 for more information and clarification.