Year-End Checklist for Church Treasurers and Bookkeepers

The month of December is a whirlwind for church leaders. ‘Tis the season for pastors planning extra holiday services and church staff members making the sanctuary of your custom steel church building light up like a Christmas tree. When the end of the calendar year rolls around, it can divert your attention away from some important end of the year fiscal responsibilities. Don’t forget to make sure your church financials are in order before the ball drops to 2015. The following are some friendly reminders to add to your year-end checklist.

W-4 Forms

All church employees need to review their W-4 forms. If they want to change their withholdings, they need to submit a form to the church. The Internal Revenue Service recommends that employees complete a new W-4 form every year or when your personal and financial situations changes.

End of Year contributions

The general rule is that a contribution is effective when delivered. The website FreeChurchAccounting.com says, “Donors must give their contributions on or before December 31st to be included in the church’s 2014 contributions. If a check comes to the church on or after January 1st, it can’t be included as part of the church’s 2014 contribution letter, even if the check is backdated. The only exception to this rule is if the offering is dated and postmarked in 2014, it can be deductible in 2014, even though it was received after January 1st of 2015.”

Housing allowances

Your church committee needs to designate a new housing allowance for its clergy who own or rent their home or custom steel church building, and for ministers that live in a parsonage and pay for some of their own housing expenses. The IRS says, “A minister’s housing allowance, or a rental allowance is excludable from gross income for income tax purposes, but not for self-employment tax purposes.”

Business expenses at your custom steel church building

If your church reimburses some or all of the clergy’s business expenses, reimburse those business expenses now. The IRS makes it clear that if the minister does not use all the funds designated for reimbursement, he cannot receive the surplus.

Christmas/Hanukkah gifts

The IRS states that any Christmas or Hanukkah gifts made by the church/synagogue or congregation to a member of the clergy or staff is taxable income and not a tax-free gift. It must be reported on the recipient’s W-2 form. These rules could also apply to volunteers, so check with a tax professional if you have questions.

Reclassification of workers

If you have a plan to reclassify a worker or member of the staff for tax reporting purposes, the ideal time to do it is at the beginning of the new year. Some pastors or church leaders could be misclassified and have errors in their taxes and withholdings. So while you don’t have to act before the end of the year, get this plan ready for action. Prepare yourself and be ready to make these changes on January 1st.

Make sure you consult a tax and financial professional before making any changes to your books! Start your year off right!

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