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Pulpit & Pew Finances

Consulting faith ministry of Cornerstone Baptist Church

My Blog

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Greetings near end of year 2016

Posted on November 22, 2016 at 11:07 AM Comments comments (0)
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

NEW TAX ON HEALTHCARE

Posted on March 12, 2016 at 2:15 PM Comments comments (3)
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.

Mostly personal note

Posted on February 12, 2016 at 11:16 AM Comments comments (1)
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.

JULY 1, 2015 CHANGE

Posted on September 2, 2015 at 2:06 PM Comments comments (0)
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.

ACA on 2014 tax returns

Posted on December 8, 2014 at 1:45 PM Comments comments (0)
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.

Call for Prudent Consideration

Posted on November 7, 2014 at 4:51 PM Comments comments (0)
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.

Being a watchful & careful steward

Posted on August 25, 2014 at 5:06 PM Comments comments (0)
If you are the Pastor or the financial person for your independent Baptist church, I encourage you to learn a little about accounting and financial reports from on-line seminars and/or some community college courses.  As the Biblical steward of the funds given by Christians for the work of Christ in your community and for world missions, you should desire to know basic accounting and tax issues that affect your church.

Another step of stewardship would be a periodic review of your systems and procedures used for the accounting processes of the church.  If in the payroll system, there are many things to be aware of also.  These services provided by independent confidential ministries, as well as local accounting firms (although these may cost more money), are needed in this day and time. The service that Pulpit and Pew Finances ministry offers is indeed one such service available to you.  I am a faith consulting missionary advising in both accounting procedures and tax matters, including tax-benefited Pastor compensation packages.  Elsewhere on this website you can see the services provided.  Things I have seen in the five years of ministry compel me to strongly encourage having some outside review done of your records and procedures.  IT DOES NOT HAVE TO BE ME...BUT PLEASE GET SOMEONE KNOWLEDGEABLE FROM THE OUTSIDE TO COME IN TO PERFORM THESE SERVICES FOR YOU.

Resistance to such counsel may not be a problem - or it may indicate there are real problems in this area.  Obviously, your main ministry is preaching and witnessing so that souls can be saved.  My admonition here is to not let something in money matters eventually hurt or even destroy a ministry.  You are aware this has happened.

I intend to have a blog posting at least once per month to inform and/or update those that have been in touch with me, or those who find this website, about necessary things and current topics, including tax matters, which often change related to the clergy.  Next posting will likely be tax related - and probably about tax issues to be aware of related to the Affordable Care Act.  It is a dynamic time for the IRS related to church tax matters.  Please visit the blog and stay more up to date.


Something New!

Posted on August 25, 2014 at 5:03 PM Comments comments (0)
I am in the process of setting up a blog page.  I plan to share comments on current issues, as well as some best procedure memos for financial aspects in the accounting management of a church.  Be back again soon...
 

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