The Ohio Independent Baptist, April 2000

Vienna Bapti ti looking for human character puppet for a new puppet mini try. If you have some you are not u ing, or know of a place to purcha e u cd one , plea e contact Arch D. McCune at \ be 11 (<t 1uno .con1 or • 330-394-1 694. We would Like to begin a ministry to widows of Ohio pastors. Jf yoit have names and citrrent addresses, please send them to Dave and Pat Warren. We are also lookingfor a perso11 or couple to shepherd these women. Financial Steward!),hip for Your Pasto1 11 - Part 2 Salar)' Restructure Sa,,es Tax Dollars By Gary l. ivashburn. r'ice-Preside11 t, Fi11a11cu1/ S1e,1·ardsl11p. Troy, \ f icl11ga11 The Internal Revenue Code allow pastor extraordinary tax advantage . not enjoyed by the general public, 'h hich wi ll put more do ll ar into your pa tor· pocket, in effect giving him a ra ise at no cost to the church! Your pastor, deacon board and trea urer rnust know the laws perta ining to the s tructure of the pa tor· compcn ation. The pa tor may receive compensation in four part , each wi th a different tax consequence. Part I - alary Income received as sa lary i full y taxable: federal income tax ( 15% or 28°/o) for most pastors), state income tax. FICA ( 15.3°/o for pa tors) and c ity income tax. Part II - li ousi ng Allowance Compensation recei , ed as hous ing allov. ance escapes a ll income taxe , but not FICA. Part III Reimbursement for Professional Expense~ Con1pen ation received a re1n1bursement for professional expenses e capes all taxation. Part JV Benefits Benefit\ are tax-free v. 1 hen paid directly to the provide r by the church. Let's begin \.v tth a single fi gure that represents the total annua l cost of en1ploying your pa.... tor. Include e, cry line item and a1T1ve at a single figure. I~or ~nkc of ill ustration let' s a\...,urne that figure 1s S40.000. \.\c'Jl put that 5,40.000 in Pan I \ALAR.Y to ~tart out, then v. c · II break the other three categories out of SALA il Y. one– by-onc. Pastor\ ""ho are ordained, licensed or <..01111111">\Joncd rna} re<..ei\ c cornpen...,auon in PAR.1 JI Jl()l S l°'\IC, Al LC)WANC I 'f hc f)J!")tor and hi"> v. lfc should <.::.ilculale their total out-of-pocket housi ng Lost"> ro, an entire <.:ale1Hla1 year ( 01 re1na1n1ng portion thereof) . v. hether thc 1 an: n.:nting. bu, ing or 11\ 1ng 111 a pa1 sonagc. Lligihh.: cxpcnscs 1nL lutlc ,nortgagc pay1ncnt~. rent , all utilities. all rna1ntc11an<..e 1n!)1dc and out. furniture. l'urnishing .... lloor CO\CI 1ngs, v. indov. tH.:at,ncnt s. lin.:n..,, delorat1011s, 1n~urarH.:e. p1opl:rty 1<1xe... ho111c and ,1ppli:.11H.:c rcp..i11 s. paint v. al lpapc, , )av, n llHJ\-\Cr g1ass seed, fl:rtd1.1cr the 11'-,t goes on (l'/11a,c note 1'1,11 l1t,u,11t}!. ullo\\ anc e ,foe, 1101 111< ltule food c /"1/1111}! ieH e/1) /11,.ecl laH II < are, ,e, 1""' ' !"'' )Olla/ 101/ett It'\ "' /)(t/n'I f ' ' o,lu<.'t~.J \\' hen the pastor a11 J\ cs at ,111 annual iigu1e, he should ad<l $2,000 101 uncxpL'Lh:d expen cs. lJl) 111g that total tigun:, the UL'.tLoll board should pass a I csolullun identll) 111g that a1nuu11l as the pastu1 ·~ annual housing allowance. The church trea urer then shoul d divide by 12, 24, 26 or 52 and cul a pe riodi c housing allowance check. incorn e tax free, lo the pastor. The housing a llo\vance DOE NOT appear on the pas tor's W-2 statement. Let 's a. ume the pastor 's annua l hous ing a llo,vancc is $ 10,000. We have now reduced taxable alary to $30,000, saving considerabl e incon1c tax.. The pastor 1n ust keep hi own housing rece ipts and ma inta in a running tota l of hou ing expenses year-to-date. At income tax ti rn e, if he spent all of the housing a llowance, he does nothing. l f he did not spend the who le arnount, he must ente r the unused portion on line 2 1 on his I040 a "Unused I lousing Allowance" and pay income tax on that a111ounl. PART III REIMBUR EMENT FOR PROFE IONAL EXPEN E . Pastors and church taff may no longer receive a llowances ro r cars, ga , library. conventions and s in1ilar item . 1lowever, such expenses common to n1 ini. try arc ava il ab le tax- free when the church adopt an ''accountabl e re imburse,ncnt progra111 . " First, the pastor rnus t conservati ve ly estimatc annua l out-of-pocket pro fe. siona l expenses. includ ing automobi le. (He may increase it later if needed.) I le hould include such expenses a bus iness cards, dues. prores iona l publ ications, continuing education, Bi bles and books, sen1inars, postage, n1eal and cntcrtai nn1ent , cell phone. \.vCddi ng and sho\vCr g ifts, conferences (includi ng travel. lodgi ng and 111eal to, frorn and at the con lcrcncc) and auton1obilc (A word about au tornob ile expense: The pastor ,nay usc e ither the Ac tua l Use Method or the Mil cage Method . Mos t pastors use the Mi leage Method. He 111ust keep a dai ly n1 ileagc log idcntifying bus iness desti na tions and purposes. and total business n1ilcs for each day. Sub1n it n1 ilcage log to the treasure r n1onth ly. The treasurer ,vi ii re i,nbur\c the pas tor at the rate of 31 cents per bus ine!'ls 1ntlc.). Next. Lhc deacon board passes a re...,olution idcnt1 fy1 ng the pastor's a,nount a ... rc11nbur..,cn1cnt fund fo r professional c,pen\es. ' I hat a1nount 1s ">ubtracted rrorn PAR I I SA i ARY. further reducing the taxable 1ncon1c of the pastor \\\:'II as...u1ne that Hl1l0llll l I \ ~ 5,000 \,\ c ha,\! IH)\\ n:dlll'L'd PAR I I ~A l A ll'r' b, a to tal of')l5.000. ~1 con">1dcrabl1: 1ncon1e ta, "ia\ 1ng~. .... Ile11nbu, ...,c1nent ... do not appc:,11 on the: rastor ·..., W-2 I he: pa.... 101 1nu-,t suh1n1t all receipt.., and his 1nile~1ge lug to th1: trcasu11:r 1no11thlv I he tr e.1surc1 \\ ii I re\ II:\\ .111d .... ub-,t,111 t1ate then, tht:n n:1n1hur-,e thc: pa ... 101 101 the I \ A( I A~1()l l'-. 1 If thc: pa ... to1 '" la\ rc:turn 1s audited, lht: Lhurt h 11ea... ure1 11n,..,t doct11ncr1t \..'\J)l:ll\L\ 101 \\ htLh hL' \\.I\ IL'llllbltr \L'd I hL' lf"L' d",lll\..'I lllll\t \,I\\..' .ill 1L'LL"IJ)t"i the pa ... to1 sub1 1111s. I l11 s 1s a " us1: 11 or lo..,L' 11' ' pr ng1 a111. I hl' pa... tol .... hould kL'L'P a I lllllllllg tot .ii or pr olC:"i\tu1utl c:Xpl'llsL's } e~11 - tll -d:ttL' II hl' ex pects not to spend all the n1oncy in th is account. he shoul d fi nd way. to spend it on business iterns be fore Decembe r 31, or he wi ll forfe it the unused amount. If he secs that he \vill l1kc ly spend more than allotted, he n1ay request the deacon board increase the amount in PART Ill , taking from PART I. PART IV- BENEFIT i ac tuall y a series o f checks pa id by the church direct ly to benefit provider.. uch bene fi ts arc ta x-free and don' t appear on the pastor 's W-2. Included in PART IV are the pa tor '· 403 B retiren1ent plan (or J RA), hea lth care insurance (includ ing vision and dental), disability insurance, and up to $50,000 o f tenn li fe in urance. No offi cia l resolut ions are required for PA RT IV BE EFIT .. Le t 's assurnc the pastor ' . bene fits an, ount is $ I 0.000. We have now reduced hi s taxable sa lary rrom $40,000 to $ 15.000, ·av1ng perhaps $2,000 - $4.000 in taxes! If your church has not been operati ng as described above. please take in1n1cdia tc: mca~urcs to get into cornpli ance v. 1th th~ Intc111al Revenue ( 'ode. ot on ly arc you forfei ti ng tax benefi t , avai lable to your pastor, you arc at risk i r audited by the IR . 1nce over 20,000 non-pro fit organila tl ons an: audited annuall y by the IR , 1t i. in111c ruti ve tha t the church be in co1npltancc v. ith the la," . Financial tcv.,ardship ha~ consul ted ,.., ith thousand~ of pastor~. church board~ and treasurers :-. ince 1985. lf )Our deacon board or treasurer needs assis tance. plca~e contact u~. We can provide ~an1rlc rcsolut1on a~\\ ell a::i comprehensive lists ofa ll o,, ablc 1tcn1s for both hou ·ing und proressiona l c, pcn~cs. \Ve ,vant to ,vork v. 1th ~ ou and an::-.,, c1 your quc~t ions. \,\ 'c , , ou ld like nothing rnorc than to he lp you get into I RC' con1pl 1a11c1.:. ,, hrlc sa, 1ng the pastor ta, do ll;.1 r" at the "i,tn1e 1in1c:. l-111c111< 1c1/ St<'11 ·11rcl.,l1111 111 Tro1. \l,c l11i.:,c111 ha, hl'<'II a 11a11011lll h c1cler 111 /cl\ ancl Ji 111111, 111/ C 011\llfflllg \i.'I I/( l'\ (0 /1(1\[()J'\ tlllcf c /11t1·l J, hoc11if, \II/('(' /() ,\, . ( H11·1 I It 11,h/>11111 , , 1 /ct -11rt· ,1de11r of I 111t111c ,al \ft 11111 d,/1111 ) 011 111,11 , 011/111 I < iarr <II ]./8 _:()C) • ./ I l-1 ,,, "' (;11 ,,/,/,()(}(>' ,, ( ,, , l 1// ~ ( )/110 i ltttrc he, 111t11• 111,I, tn , c>llft:t r thl ()/110 r,· 1,, c,,·111a,,, c. J>c1,10, n, "l, < t,111... 01 u,, ,,11 JI, 11!,hl, IJ01>11,1. II, I /111 / ft ·1gli1, ( )/110 Bagtist Children's Home & Family Ministries • Adoption (inc luding f ore,gn) • Group Homes • M aternity/ Pat ernity Counseltng • Family Counseling 40 <Years of ('an.rig ()h10 () flicc l)J7 122 0006 l harh:~ r..1unroc ( )hit> l)1n!l-lllr ' '