Table of Contents
Special Index for Church Treasurers v
Policy Checklist vii
Introduction x
Recent Developments 1
1 Faithful Administration 3
Independent board 8
Managing conflicts of interest 9
Compensation review and approval 12
Proper stewardship practices 13
2 Tax Exemption 17
Advantages and limitations of tax exemption 18
Tax exemption for churches 19
Starting a church or other nonprofit organization 21
Unrelated business income 24
Private benefit and private inurement 31
Filing federal returns 34
Postal regulations 43
State taxes and fees 44
Political activity 46
3 Compensating Employees 49
Reasonable compensation 49
Internships 50
Housing and the housing allowance 50
Deferred compensation 55
Maximizing fringe benefits 56
Nondiscrimination rules 67
Paying employee expenses 67
4 Employer Reporting 73
Classification of workers 73
Reporting compensation 78
Payroll tax withholding 78
Depositing withheld payroll taxes 82
Filing quarterly payroll tax forms 84
Filing annual payroll tax forms 85
5 Information Reporting 95
General filing requirements 95
Reporting on the receipt of funds 97
Reporting on the payment of funds 97
Summary of payment reporting requirements 105
6 Financial Management and Reporting 107
Recordkeeping of income and expenses 108
Accounting records 112
Financial reports 117
Budgeting 122
Audits and other related services 123
Fraud 126
7 Charitable Gifts 137
Charitable gift options 138
Percentage limitations 141
Gifts that may not qualify as contributions 142
Charitable gift timing 144
Acknowledging and reporting charitable gifts 146
Quid pro quo disclosure requirements 159
8 Special Charitable Gift Issues 173
Giver-restricted gifts 173
Contributions to support missionaries and other workers 176
Contributions to support short-term mission trips 180
Other special charitable contribution issues 191
Sample Policies and Guidelines 203
Projected 2020 Employer Tax Filing Dates 206
Citations 207
Index 210
10 Biggest Tax and Financial Mistakes Made by Churches and Nonprofits 213
10 Tax and Finance Questions Most Frequently Asked by Churches and Nonprofits 214
Special Index For Church Treasurers
A guide within a guide
Unrelated business income 24
Political activity 46
Employee compensation
Deferred compensation 55
Dependent care assistance plan 61
Disability insurance 62
Expense reimbursements 67
403(b) plans 56
Health care 61
Housing allowances 50
Loans to employees 62
Medical expense reimbursement 68
Moving expenses 64
Overtime and minimum pay 65
Property transfers 64
Social security reimbursement 63
Vehicles provided to employees 58
Workers' Compensation 65
Workers at the church
Are ministers employees or independent contractors? 73
Classification of ministers 76
Depositing withheld payroll taxes 82
Filing quarterly payroll tax returns 84
Filing Form W-2 85
Special tax provisions for ministers 77
Withholding FICA taxes 78
Withholding federal income taxes 79
Information return filings
Interest payments 97
Payments to nonresident aliens 99
Payment for services 100
Payments to volunteers 102
Payment of moving expenses 102
Receipt of mortgage interest 97
Financial records of the church
Budgeting 123
Chart of accounts 109
Financial reports 117
Guidelines for handling offerings 128
Internal audit guidelines 128
Charitable contributions
Contributions to support: missionaries or workers 176
Staff 192
Individuals other than staff members or the needy 194
The needy 195
Short-term mission trips 180
Contributions by volunteers 197
Giver privacy 165
Gifts that may not qualify as contributions 142
Granting of scholarships 195
Letter to noncash givers 148
Quid pro quo disclosures 159
Private schools 192
Receipting charitable contributions 146
Refunding gifts or sending contributions to another charity 199
Reporting noncash gifts to the IRS 146
Insurance for the church
Disability 62
Health 61
Workers' Compensation 65
Key laws that apply to churches
Fair Labor Standards Act 65
Immigration control 103
