Please note some date changes related to annual tax form filings -

Due somewhat to the desire to inhibit tax fraud activities, the Federal W-2's & W-3 filings are due by January 31, 2017,  This is the same day they are to be provided to employees.  [There used to be a month after employees received forms that the filings with the government were due - used to be end of February.]

This is also true for the 2016 IT 3 filings, along with copies of the W-2's for the State of Ohio.  Without research, I am presuming that the date has moved up to Jan 31 for other states as well.

Carefulness is key in the preparation now, since any error can only be fixed by filing corrected forms, rather than fixing before filing originals.  You want to avoid having to file corrected forms as much as possible.

Tax return dues dates have not changed; but for the annual forms mentioned above, please note and act on the change.

I would like to wish a Happy Thanksgiving and a Merry Christmas to the many who have allowed me to be of help to you over the past seven years.  I count it a privilege from God to be able to offer this ministry of helps to small/medium sized independent Baptist churches.

I am currently booking meetings for the first half of 2017.  If you would like, or need me to be of service to you, please contact me to set up time in my schedule.  If any would be able to consider setting up a monthly support arrangement, I would greatly appreciate it, and would be a continual resource to you in financial areas of your ministry, and even a conduit for legal questions that I can direct to legal services I work with for the benefit of churches.  Since this is my primary ministry now, I mention the support option as a help in stabilizing my budget to enable the ongoing research and notifications to you in the future.

The trends I have been seeing for a few years have not been favorable toward clergy and churches.  With the recent election, I am hopeful that we will see things improve toward churches, and that recent tax changes for pastors' tax returns may be reversed.

Thank you again for your interest in checking in with this blog.  My intent is to have some regular and helpful postings for your benefit.  If questions are prompted by something you read, I trust you will contact me for additional information or clarification.  Again, enjoy the holidays with family and friends.

Your servant in Christ,

Dick McMillen

PULPIT & PEW FINANCES Consultant

IMPORTANT TAX ITEM FOR PASTORS TO KNOW...

For the entire year of 2016, any amounts that your church is able to pay to help with your health needs - insurance premiums, or payments to shared medical plans, or medicines or health care costs reimbursed to you - is now TAXABLE to you in that year.  This is a change from many years before, due to ACA and IRS changes affecting small businesses and CHURCHES.

And if you are in Social Security, the total tax rate for you could be up to 25%. So, for example, if the church has paid $10,000 of health benefits for you, you are now facing up to a $2,500 tax bill that will be new for you.

I am encouraging churches to consider an adjustment in their Pastor's salary for whatever the estimated taxes calculate to be in your case.  The Pastor will get no more take-home pay than before; the increase simply gets sent in to IRS to serve to pay this tax burden.  Please note that this increase is also taxable for the Pastor, but a much smaller burden than if the adjustment can't be made.  I realize not every church is able to respond financially in this way.

This is shared simply to avoid surprises at the year-end, or to warn about the possibility of preparing taxes in error which may cause penalties and interest later.  If you need other information, or have questions about this, please contact me.

On a mostly personal note, just updating those who check on my blog about a couple personal items.  My wife, Kay, is finishing up in March the year-long surgery, chemo, radiation and more for cancer.  The latest report from tests is that she seems to be clear of cancer going forward.  We praise the Lord for His directions through this entire time and the working in her physically.

Second note - I had some partial knee replacement surgery in early January, and have completed the allowed therapy to restore range of motion.  We see surgeon on 2/16 for assessment; but it seems to be very good at this time.  We were set aside for a brief time; but now can sit at desk again and back to the current calling from the Lord.  We will be teaching again in the fall.  For now, we are planning again for church visits scheduled, while getting deep into tax season, as well.

If we can be of help to you with a financial review, or speaking, or just a phone or email consult for a question you may have, please make contact.

And again, for those that were a little closer in the loop during the events mentioned above, thank you for your prayers and care expressed toward us.

I believe that financial aspects of a ministry are so very important; and I remain at the ready to help you be in compliance with regulations, careful and protecting of church resources , and handling clergy payroll items in correct and tax-advantaged ways.  We also encourage your active decisions in planning for your future.  We live as though Jesus is coming right now; we plan anyway, not knowing exactly when He will come.  Provision for you and your family in life's later years is too often neglected by our independent, fundamental, Baptist pastors.

We remain available to you in this faith Ministry of Helps.

As we approach year-end 2015, I wanted to update and report on a few things.

Thank you to so many that have prayed for my wife this year as she had surgery, then chemo, and then radiation to treat cancer.  She currently has good blood numbers, and we are trusting that God is seeing fit to direct a recovery for her.

Next, I wish all of the readers of this a very Merry Christmas and Happy New Year.  To be blessed, you indeed must truly know Jesus Christ as your personal Saviour by faith.  If you have never done this, please take care of that.  Contact me if I can help you with this understanding of this most important decision that must be made in life.

Then, I will be having partial knee replacement surgery in early January, 2016. Please pray for speedy recovery that I can meet planned obligations of the ministry.  I am currently booking meetings for 2016.  If I can be of help to you and your church, please contact me so we can get you on the schedule.  We have several things scheduled through June, but that are openings in all months.

One update to be aware of for 2016...the ministry mileage rate is a maximum of  $0.540 per mile for the year 2016, down from $0.575 per mile, due to the decrease in the price of gasoline.  This is of course represents the rate for actual non-commuting miles driven for ministry purposes. If you have people that regularly use their cars for charitable purposes, their rate is unchanged at $0.140 / mile.

As other tax or ACA changes are announced, I will post updates for you.

Have a great year in Christ.  Pray for souls, missionaries, and our nation.

Yours faithfully in Christ...

The ACA (Affordable Care Act)(Obamacare) has another impact on Pastors in 2015.

Many of you have previously (for 2014) had to go to the government exchange to get some insurance coverage, quite often subsidized by the government, based upon the income estimate you used when signing up for it.  As a result, many have coverage (not necessarily care) for less that $200/month, and probably have a fairly high out-of-pocket deductible.  Before telling you what is new as of July 1, 2015, let me comment here on some things to be aware of related  to this 2014 procedure that many entered into to avoid paying penalties on your tax returns.  And you received a 1095-A form with data for your tax return.

   1. Hopefully the 1095-A form was correct.  In the first year, many were not.  You should have received a corrected one.  If you had filed your tax return      already, it may mean you need to file an amended return.

   2. If your actual income was more than the estimate you used when signing up for the coverage, you likely had to pay back some of the subsidy you received if your return was filed correctly.  Reasons that estimates were bad include:

      a. you didn't think carefully about a realistic estimate:

      b. you unexpectedly got more income  than you planned to have;

      c. you cashed in an IRA or 401k to buy a car, or for house downpayment, etc. If you did this, and you are under 59 1/2 years old at the time you had to pay a 10% penalty tax on the amount withdrawn as well as the normal income tax on it...and it caused you to have to repay some subsidy amounts; AND, it was taxable for social security self-employment tax.

If you have not gotten insurance and paid the penalty, note that penalties will increase for 2015, and greatly increase after that.

If questions on any of this , please contact me.

As of July 1, 2015, any health insurance benefits, or health cost reimbursements that your church may be paying for you ARE NOW TAXABLE TO YOU, including social security taxes.  This had previously been a non-taxed benefit for Pastors.  And these had been allowed on a "discriminatory basis"; that is, the church could provide this benefit for the Pastor and not be required to offer it to all paid staff.  This has ended, due to ACA and changes in IRS tax law involving churches and small businesses (under 50 employees).  The options a church has are:

     * Cease providing this benefit for the Pastor entirely;

     * Establish your own administered health plan, offered to all employees, and be subject to considerable reporting and regulations thereon;

     * Continue doing what you had been doing - except now that benefit becomes taxable to the Pastor.  [This includes the likelihood of upsetting the estimated income used if in a state or federal exchange program.]  The amounts would need to be added to the Box 1 income on the W-2 given to the Pastor at the end of 2015.  Amounts included are for the period July 1 - Dec 31, 2015.

Since this is a reality now, you may want to look into one of the Christian health co-ops that are available with better coverage and relatively stable costs.

With apologies, this is the first blog posting of 2015.

About a month after my last posting of 2014, my wife, Kay, was diagnosed with Stage 2 breast cancer.  The subsequent seven month has involved surgeries, chemo treatments, and currently, radiation treatments.  Some aspects of treatments will continue through Feb of 2016.  Her current reports look very good; and we remain quite hopeful that the early find, the good medical people we were directed to, and the procedures underway are all directed by our loving God in His providence toward her healing and recovery.

We are continuing in the P&PF ministry, but did have to cancel, reschedule or modify some involvement during this period.  The churches involved have been kind and patient, and have been praying for Kay and her recovery.  For those that I still owe reports or schedules to, please know that I am involved in these again with a goal of soon completion for you.

I have done several tax consults and telephone projects, even for new churches. I am able to travel some again, with my daughter handling schedules when I am away from home.

The next post (to follow very shortly) will update on some important health care and tax issues that Pastors and churches need to be addressing.  Some of these involve tax planning items for the Pastors.

If  you wish to contribute to this ministry, please send gifts to the mailing address.  These are appreciated and help permit me to actively research and buy source materials for the purpose of keeping you informed and up to date on important issues.  I appreciate the opportunities that I have had to actively work with you; and I remain at your service by any of the contact methods shown on the website.

As we wrap up those 2014 things, I wish you all a happy and great New Year 2015!

Couple of reminders for those I have worked with over the past five years of this ministry:

If in payroll system, year-end 941 reports are due by the end of January.  And state filings and reconciliation sheets are also due in January.

W-2's and 1099's (as needed) should be prepared and distributed by Jan 31.  Related W-3/W-2 and 1096/1099 filings are due by February 28.

Those in EFTPS (payment system for federal taxes withheld), try to do these payments by the 15th of the following month.  States may be either checks mailed, or electronically paid, depending on your state.

The business mileage reimbursement Federal maximum rate for 2015 is $0.575 per mile.  [If gas prices stay down, I suspect they will amend this.

As health care issues take on more definition, we will share information in future blogs.  Even the tax reporting forms are not fully ready at this moment for 2014 filings.

______________

I have finished five years in this ministry as of Oct 2014...and I continue to work at this for the benefit/help of those who call upon me.  I am making an appeal here that I have not done in the first five years... would/could you consider monthly support of Pulpit & Pew Finances?  This ministry is to help churches have good financial procedures and accounting, and that all necessary outside reporting is done timely and correctly.  This helps provide financial stability for the church so that your Missions efforts can go on around the world.

If your By-laws or Policies permit supporting me as a Financial Missionary, I shall appreciate this support.  Some cannot support any missionaries except church-planters, etc.  But if you can, your help in this area helps with budget stability for this ministry.  Thank you for your consideration.

Please call or email if I can be of assistance to you this year.  And your referral of this ministry to other Pastors in your acquaintance is also greatly appreciated.

So have a Happy New Year 2015!  Keep on keeping on for the Lord in this year as we look for His coming again!

Researching the proposed 2014 tax form 1040 [still in draft form at this date], I find that the reporting for the Affordable Care Act aka Obamacare on your tax filing will likely involve answering questions on line 46 and line 61, and any related forms that are used for these lines.  Whether you file your own taxes, or have a preparer do it, most people will have to address matters related to these lines.

Whether this all comes together well is yet unknown.  And if you have employer-provided coverage, there will likely be little to no effect on this year's taxes since the employer mandate has not kicked into effect yet.  The effect on Pastor's returns is not yet clear, but could involve issues like did you have excess government subsidies, are you covered at least to Bronze level of the law, or do you have to pay the penalty of 1% of MAGI or $95 per family member, whichever is higher.

As I become aware of more certain information, I will post more data that you can use, or that you can ask your preparer when getting taxes done.

I shared the following with those at a legal conference a year ago...and it still applies.

Five years in this ministry to churches, I now believe that nearly any and every Independent Fundamental Baptist Church, Camp, or Missions Agency should take advantage of such services.  There are other throughout the country that do similar services that I offer; so I am not necessarily soliciting for call to me, although I do not discourage that.  Self-promotion is not the goal in this blog today.

During the five years, I have found several interpretations of tax, reporting, and controls are simply wrong.  The usual response is that the leaders did not know or think they were doing anything wrong or potential hurtful for their ministry.

In some cases, self-derived interpretations have yielded payroll tax issues and liabilities with penalties.

I two cases, large amounts of money have gone missing at the hands of long-trusted treasury people in ministries.  The vast number of financial people are honest, hard-working, and often reluctant volunteers.  Trust destroyed cannot be achieved again.  Procedures for review in place are usually appreciated by the volunteers doing the work...and they appreciate the protection that proper procedures in place gives them.  No one can accuse someone through good procedures that are followed and checked upon from time to time.

System reviews are to show IF there are any weak areas, if needed.  Church leadership should be careful to give their people this protection.  It also is a key element to enhance financial stewardship in your church.  People give to see the work of the Lord go forward...and expect that to happen, and not be lost due to procedural oversight.

The independent reviewer does not need to be me.  But I do encourage Pastors to seriously consider having a review done periodically to protect themselves, their people and the assets of the church.

If I can help you, I do welcome your call or email.