resources for church treasurers
District Treasurer Patrick Rhoton firstname.lastname@example.org
Definition of Income for Funding the Mission
Guidelines for Record Retention and other legal items from the Global Ministry Center
ECFA Minister's Tax and Financial Guide
ECFA Church & Non-Profit Tax and Financial Guide
501c3 Verification from Global Ministry Center
Visit http://forms.nazarene.org/published/general-secretary/501c3.php to request the verification.
To avoid unnecessary delays, please confirm the following:
1. Your church is incorporated and the corporation is listed as being in good standing with the secretary of state or corporate divisions office of your state. Most corporate statuses can be confirmed online by entering “[your state] corporation search” in your search engine and selecting the appropriate government website.
2. If you cannot find information about your church, be sure to try any other name your church may have used; the state may recognize your corporation under a different name than what your church has been using.
3. If you are still unable to find information about your church, you will need to contact the appropriate government office to determine whether your church ever incorporated. If it has not been incorporated, you will need to do so. Most states allow that to be done online in less than an hour.
4. If your church corporation is not in good standing because it is in default, forfeited, or delinquent in filing, you will need to resolve that issue before a 501c3 letter can be issued.
Memo #1 - Housing for Your Pastor: Parsonage or Housing Allowance?
"Should we continue to provide a parsonage and utilities or should we change to a cash housing allowance and let our pastor buy his own home?" Across our denomination this difficult question is being asked, often out of genuine concern for the pastor's dilemma at retirement, when he or she has no real estate investment built up for a retirement home.
Memo #2 - Church Employees or Independent Contractors?
Dear P&B: The only employee we have besides our pastor is a part-time custodian (or secretary). Do you know of any way we could pay them by contract and save the trouble of withholding income taxes and Social Security/Medicare (FICA) taxes?" In one form or another, this question has been asked literally hundreds of times in financial seminars, correspondence, and telephone conversations. The questions come as a response to the increasing responsibilities of churches and other employers for reporting employee compensation information to the IRS. Fortunately, the answer is fairly straightforward.
Memo #3 - Tax and Reporting Procedures
The tax and reporting requirements with which churches must comply often seem to complicate the task of the local church treasurer. Many treasurers who volunteer their services to the church feel the special tax treatment of ministers adds another level of complexity to an already time-consuming task. Following is an overview of many of the basic federal tax and reporting issues.
Memo #4 - Strategies for Structuring Ministerial Compensation
A review of the patterns of ministerial compensation over several decades would indicate that significant changes have taken place. Because of many social changes, gone are the days when the majority of ministers received a large portion of their compensation in the form of food and clothing supplied by members of the congregation. The implications of the 1986 Tax Reform Act and subsequent IRS regulations are also among the reasons causing these changes.
Memo #5 - Minimizing Income Taxes for Church Employees
One of the many responsibilities that church boards face is that of minimizing income taxes for their church employees by appropriately structuring their compensation package. IRS tax rulings not only make this possible but also make it very important. Unfortunately, some church employees pay additional income taxes simply because of the way their church employer has established their salary structure. Changing IRS regulations and current rulings make it all the more important for church boards to periodically review the salary structure of all their employees.
Memo #6 - Housing Allowance in Retirement
Under current IRS provisions, retired ministers who are ordained or district-licensed in the Church of the Nazarene may receive up to 100 percent of Pensions and Benefits USA-administered retirement plan payments as housing allowance. Of course, any tax-free housing allowance, whether received from the Basic Pension or General Church Pension portion of the Nazarene Single Defined Benefit Plan, the World Mission Pension Plan, or the Nazarene 403(b) Retirement Savings Plan, must satisfy tax code limits.
Memo #7 - How Much Do We Pay the Minister
Scripture specifically speaks about the importance of caring for and supporting pastors. In fact, the relationship between pastor and flock is intended to be one where each cares for the other. The pastor is called to preach the Word and shepherd the flock, while the congregation’s role is to provide material support and encouragement for its shepherd.
Memo #8 - The Annual Church Audit
Church board members have a long list of responsibilities. Among these is the responsibility for the money that flows through the church. It’s such an important issue that the Manual contains at least three paragraphs about it.
Memo #9 - Workers' Compensation Laws and the Local Church
Workers’ Compensation laws exist in all states and Canada. They are designed so that benefits (both medical and disability income) for the work-related accident, injury, or illness can be paid promptly without the need for expensive legal fees to determine fault. Medical benefits have no dollar or time limits and cash benefits are paid for lost wages due to impairment or disability. In severe cases, medical and vocational rehabilitation benefits may be provided.
Memo #10 - Can Ministers Opt Out of Social Security?
The Tax Code does provide a means for some ministers in some denominations to exercise an option to terminate Social Security/Medicare coverage for their ministerial earnings. IRS Form 4361 must be used, and it must be filed on the correct basis of religious belief. If approved by the IRS, only earnings from ministerial services are exempt from self-employment tax. Form 4361 indicates that once the exemption is approved, you cannot revoke it.
Memo #11 - Auto and Other Business Expense Reimbursements
Churches can be better stewards and help their pastors save tax dollars by establishing accountable expense reimbursement plans. Learn how with this memo.
Memo #12 - Who is a Minister for Tax Purposes?
“Who is a ministerial employee for tax purposes?” The answer is significant because it affects how an individual reports compensation and pays taxes. Perhaps the greatest single issue this affects is how to report the value of housing provided and/or the amount of housing allowance paid.
Memo #13 - The Minister's Housing Allowance
A substantial tax benefit is provided to qualifying ministers based on Section 107 of the Internal Revenue Code (IRC). It consists of only one sentence which currently states that: “In the case of a minister of the gospel, gross income does not include — (1) the rental value of a home furnished to him as part of his compensation; or (2) the rental allowance paid to him as a part of his compensation, to the extent used by him to rent or provide a home and to the extent such allowance does not exceed the fair rental value of the home, including furnishings and appurtenances such as a garage, plus the cost of utilities.”
For local churches to give/login toward World Evangelism/P&B/Education/District, click here.
To assist you in paying allocations, you can now give to all four areas at one online location (World Evangelism, Pensions, Education and District Fairshare www.fundingthemission.org).
We are excited to merge our district giving system with the Global Ministry Center site. Please know that the Education funds will track through the district so that gray circle will never fill-up. To view your giving to District and Education, click “More Details” which will take you to the “Financial Detail Summary” page.
For local churches to mail funds:
All General Funds (World Evangelism, Mission Specials, Pensions and Benefits) payable and sent to:
Global Treasury Services
Church of the Nazarene
P.O. Box 843116
Kansas City, MO 64184-3116
All District Funds (Fair Share and Education) payable and sent to:
North Central Ohio District
PO Box 947
Mount Vernon, OH 43050