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2012 Year-end IRS Regulations for the Church
What You Need to Know;What You Need to Do
STEWARDSHIP GOD’S WAY
Copyright 2012
Year-end IRS Regulations
Why Worry about the IRS?• No longer a church friendly government• Government is broke• We are low hanging fruit• Loss of 501c(3) status• Fines• Obey the Law
STEWARDSHIP GOD’S WAY
Year-end IRS Regulations
Print out Year-end Contribution Statements and Mail Them
• Statements must have the Statement on them• NO goods or services were provided by the
organization in return for the contribution• IRS can deny the deduction if the statement is
not on the Contribution form
STEWARDSHIP GOD’S WAY
Have Employees fill out Annually… HSA/HRA/FSA insurance form if
high deductible insurance is offered
Dental form if dental insurance if offered
Salary Reduction form for 401K or 403B retirement plans
Housing Allowance form (ministers only)
Strongly recommend a new W-4
Take Advantage of the New Limits!
About those I-9’s I-9 must be filled out by all employees and
filed separately from employee file All employees (new employees and those
hired since Nov. 6, 1986) must fill out section one of Form I-9 and churches must fill out section two
Do not file Form I-9 with U.S. Immigrations and Customs Enforcement (ICE) or USCIS. Form I-9 must be kept by the employer either for three years after the date of hire or for one year after employment is terminated, whichever is later. The form must be available for inspection by authorized U.S. Government officials (e.g., Department of Homeland Security, Department of Labor, Office of Special Counsel).
Depositing Withheld Taxes
Three types of taxes collected: Income taxes, employee’s FICA, employer’s FICA
Taxes paid monthly if taxes are $50,000 or less in the lookback period
Taxes paid bi-weekly if taxes are more than $50,000
See IRS Publication 15- download a new one
Form 941 – A Must Filed Quarterly on the last day of the
month and can be filed electronically Use the 941X if you make a mistake Done even if you only have ministerial
staff Taxes less than $2,500 are sent with
form 944 at year end-be timely in payment:
For 2013: If you estimate your taxes will be less than $1,000 you may contact the IRS and request to use the 944 form. See document.
W-2 and W-3
W-3 is Transmittal form for W-2’s
W-2’s – Fixing Mistakes W-2c if you make a mistake W-3c if you make a mistake on
the W-3
W-3 Boxes
X X
W-2 Preparation
Ministerial
Form
W-2 Preparation
Non-ministeria
l
Form
IRS form 4361 Regarding Ministers who opted
out of Social Security They can require that you
produce it in the future
They are now doing so Penalties can be severe if you
cannot produce it
1099 MISC Issued to self-employed for income tax or
non employees. Issued if paid more than $600 annually
Not needed for a corporation or for anyone who will receive a W-2 from another employer for work done
Name, address and SS needed before 1099 can be issued. Get the info before payment is made and have them fill out a W-9
1099 is corrected by reissue with the box at the top mark checked
1096 is the Transmittal form for 1099 misc
FULL REPORT
DOWNLO
AD
Form DE-542 (CA)– Independent Contractors WHO MUST REPORT:
Any business or government entity (defined as a “Service-Recipient”) that is required to file a Federal Form 1099-MISC for service performed by an independent contractor (defined as a “Service-Provider”) must report. You must report to the Employment Development Department within twenty (20) days of EITHER making payments of $600 or more OR entering into a contract for $600 or more with an independent contractor in any calendar year, whichever is earlier. This information is used to assist state and county agencies in locating parents who are delinquent in their child support obligations.
DE-1NP (CA)– Employment form for Non-Profits An employer is required by law
to file a registration form with the Employment Development Department (EDD) within fifteen (15) calendar days after paying over $100 in wages for employment in a calendar quarter, or whenever a change in ownership occurs.
DE-34 (CA) - REPORT OF NEW EMPLOYEE(S)
WHO MUST BE REPORTED: Federal law requires all employers to
report all newly hired or rehired workers to EDD within 20 days of their start-of-work date. State and county agencies use this information to assist them in locating parents who are delinquent in their child support obligations.
An individual is considered a new hire on the first day in which he/she performs services for wages. An individual is considered a rehire if the employer/employee relationship has ended and the returning individual is required to submit a W-4 form to the employer.
DE-9 (CA) - Quarterly Wage & With - holding Report Can be done online at
www.edd.ca.gov State version of IRS 941 DE-9C Employee Information Both must be sent in each
Quarter
DE-7 (CA) - Annual Reconciliation Report
You can get assistance at 1-888-745-3886
No Longer Done!
Franchise Tax
Every church or ministry that incorporates in the state of California has to pay a minimum tax of $800.00 per year unless the church or ministry files for an exemption. The exemption is not automatic!
Churches get these notices because they never filed for the exemption. In order to apply for the exemption, you need to file Form FTB-3500 or FTB-3500A. If you have recently incorporated (within the last 4 years), and have not filed for the exemption, we encourage you to do it immediately.
Withholding on Out of State Guest Speakers California requires all churches and
ministries to withhold 7% of all honorariums over $1,500.00 paid to guest speakers that live outside the state
Report to the state on form 592-B the amount of earnings and the amount of withholdings.
Beginning January 1st, 2010 the limit is $600.00. Therefore, it may be safer to automatically withhold the 7%. The penalty for not withholding is at least 10% of the entire honorarium. This is a penalty against the church.
Excise taxes
If a church in California purchases something from an out of state vendor, the church is usually not charged sales tax because the vendor is from another state. However, in California tax code 165.0014 excise taxes are to be imposed upon churches and religious organizations that purchase tangible personal property from out-of-state sellers for use in California.
FORM 401-DS by January 31st of each year When the church gets products and begins to
use them, it is required to report the purchase and pay an excise tax equal to the regular California sales tax.
Unrelated Business Incme
Any income that does not match the purpose of the church
Cell tower income, etc File a 990T Does not apply to churches
renting your facilities to hold church – same type of business
Statement of Information
Updates your church office address Updates your Principal Officers; Pastor
(CEO), Secretary, Chief Financial Officer (Treasurer in small church)
Must be done biennially http://www.sos.ca.gov/business/corp/pdf/so/corp_so100.pdf
No cost Penalty for not doing so: possible
Corporate Status Suspension To see your status:
http://kepler.sos.ca.gov/
Other Federal Requirements All cash donations less than $250 must be substantiated by either bank record (canceled check) or written communication from the charity
All donations over $250 must be substantiated by written communication from the charity with name of donor on statement
Property over $250 in value must have description
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Other Federal Requirements
Gifts in excess of $5,000 must be appraised by an accredited appraiser and IRS form 8283 must be used to document the gift. Donation is the sale price.
Receipt should not list value of the gift
Donee (church) must keep sufficient records to validate gift-form 8282
Receipt must be given no later than date of donation or tax return due date
Additional Helps
Toll free (866) 455-7438 for help with W-2, W-3, 1096, 1099
Order IRS forms from 1-800-829-3676 or http://www.irs.gov/businesses/page/0,,id=23108,00.html
EDD forms http://www.edd.ca.gov/Forms/default.asp
http://www.stayexempt.irs.gov/
Where Do I Get the Forms? Post office Library IRS – mail Also helpful: All publications to
stay on top of tax laws http://www.irs.gov/app/picklist/list/formsPublications.html
Additional help from GuideStone http://www.guidestone.org/MinistryTools/~/media/GuideStone%20Corporate/Ministry%20Tools/MinTaxGuide/2011/2112_MinistersTaxGuide5.ashx
YEAR END CHECKUP FOR CHURCHES. 15 + PAGES, PLUS A CHECK OFF PAGE
Additional Helps and Information
David Rutledge EA, CEP, RFCRutledge Financial Group
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WHAT QUESTIONS CAN I ANSWER FOR YOU?
(559) 256-0858 direct line(559) 287-7840 cell [email protected]
Rod WiltroutChurch Finance Specialist
www.csbc.com/financialmatters
