ministers salary set-up

[deerfld]

We began using PowerChurch Plus 11.5 on January 1, 2013. Unsure how to set-up the minister's salary. Our minister has opted out of social security and receives a monthly utility allowance which is taxable for federal and state, but not subject to FICA and Medicare. Also, minister's salary is drafted from the bank account on the 1st day of the month. Set up this payment in repeating payments in A/P, but am unsure how to set up the utility payment in payroll so it will appear on the 941 and w-2 correctly.

[JohnDMeyers]

This is how to set it up in Payroll

For the Utility Allowance

In the Payroll / Setup / Maintain Item Descriptions
ADD
Income
Utility Allowance
(expense account)
(bank account)
Taxable

In Payroll / Maintain List of Employees
(pastor's employee record)
Pay Items tab
Add
Wage Income (taxable)
Utility Allowance (taxable)
Fed W/H (you set the amount of withholding)
State W/H (you set the amount of withholding)

If you don't add FICA to the Pay Items, no FICA will be withheld.

[Jeff]

John is right in the setup, but need to add the following.

For the pastors pay items, under tax options, select the more options settings. This will open up a list where you can deselect Social Security & Medicare from Salary Item and Utilities Allowance. This will keep those 2 items from appearing in Boxes 3 & 5 of the W2, but they will be included in Box 1 and the state boxes.

[newsboy9]

I'm in the same boat as far as just setting up payroll. But our pastor lives in the parsonage and the church pays all utilities, I'm pretty sure this should be taxed but I'm unsure how to go about it since the price of utilities changes each month.

[NeilZ]

I'm in the same boat as far as just setting up payroll. But our pastor lives in the parsonage and the church pays all utilities, I'm pretty sure this should be taxed but I'm unsure how to go about it since the price of utilities changes each month.

Actually, Manse Allowance is not Federally taxed, but is taxed under Social Security & Medicare, or Self-Employment tax. However, as it is not a monetary benefit, it cannot be added to the SS & Medicare W-2 boxes, and must be shown in Box 14 for use by the tax preparer.

We've found the best way to do this is just type it in block 14 of the W-2 after they are printed. In our case, the annual cost is set at $10343, so the entry looks like this:

Manse Allowance: $10,343.00

The main thing is that your church board HAS to set the manse allowance so that it reflects the average annual rental price in your area. This has to be done in the prior year, and it has to be recorded in the minutes of the board meeting. If you need to include utility costs in that allowance, that needs to be figured in. In our case, the local Presbytery sets the minimum manse allowance, and they specify that the allowance includes the utility costs.

[mariecouch]

Jeff mentions "more settings" under tax options in pay items, I am in PowerChurch 11.1 and do not see the "more settings" under tax options. please advise if this is a new feature.

[NeilZ]

Jeff mentions "more settings" under tax options in pay items, I am in PowerChurch 11.1 and do not see the "more settings" under tax options. please advise if this is a new feature.

Marie,

Marie,

This is not a new feature, you have to go to the module under: Payroll -> SETUP -> Maintain Item Descriptions.

Select the item you want to adjust (or add a new income item). Right under the Expense Account entry, you'll see a tag that says Tax Options: with a dropdown menu next to it. Open the drop down and you'll see the More Options item, select that and you'll then see the list of all the various taxes you have setup in your program. You can then select which ones apply to the item.