Housing allowance. The personnel or stewardship committee (or the congregation) should designate a housing allowance for 2011 for ministers who own or rent their home (and for ministers who live in a parsonage and who pay some of their housing expenses). A sample housing allowance resolution is available at GuideStone.org
Required Forms. All employees should review their W-4 form, and A-4 form and submit a new form if circumstances have changed.
Notice to donors. Richard Hammer suggests “Donors should be advised in the church bulletin or newsletter, or in a letter from the church, not to file their federal income tax return before they receive their contribution summary from the church. Donors may not be able to deduct individual contributions of $250 or more if they file a tax return before receiving a contribution summary from their church.”
“A contribution is effective when delivered. This means that a check deposited in the church offering in January of 2011 cannot be deducted in 2010 even lit is backdated to 2010. One exception—checks that are mailed and postmarked in 2010 are deductible in 2010 even though not received until 2011.” Church Law and Tax Report, ChurchLawToday.com
Christmas gifts and love offerings. Christmas gifts made by the church or congregation to a minister or lay staff member are taxable income and not a tax-free gift, and must be reported as income on the recipient’s W-2 or 1099.
Business expenses. If you have an accountable reimbursement plan for your minister, and there is a balance left in the account at the end of the year, do not give the balance to the minister. If you do, it will make all reimbursements for the year taxable income.
For more information about any of this information, feel free to contact me directly at 334-613-2241 or via email at firstname.lastname@example.org. Your office of Church Compensation at the Alabama Baptist State Board of Missions looks forward to being able to serve you!