Deductions from paycheck

[dfcwagoner]

We pay our pastor as contract labor, with no taxes held out (1099 at the end of the year). As a convenience for him, we deduct his tithe & offering out of each check. How can I enter that in PC+ to properly record everything? The only way I've thought to do it so far is post the check as the gross amount, then post a deposit from him for his tithe and offering. Is there an easier (or more appropriate) way to do this?

[Matt]

Let's say the gross amount is $1,000 and $100 is deducted for the tithe. The accounting entry should look like this when posting the check:

Debit Pastor Salary $1,000
Credit Checking Account $900
Credit Offerings Income $100

If the Pastor wants a contribution statement you will need to also input the $100 in the Contributions module. However when you go to post you will only want to post to the Contributions module only.

[tenalea]

Hi! I just saw your post and wanted to send you a word of caution. Generally, you are not supposed to give your pastor a 1099. He is considered an employee for income tax purposes and should receive a W-2. They are only considered self-employed when it comes to Social Security taxes. The tax law is a little complicated on this but I have been told that if you give a pastor a 1099 it is a big red flag to the IRS and they will usually be audited. I was told to never send a 1099 to my pastor. I would also think that in handling him through a 1099 you would negate the housing allowance benefits available to pastors, but I am not sure on that one.

I am sending you a link to the Baptist General Convention of Texas. About half way down the page you will see a section called "Tax Guide for Churches". You can download this guide for yourself. It has been a wonderful resource to me over the years in not only payroll matters, but contributions and other areas as well.

http://www.bgct.org/texasbaptists/Page. ... &srcid=251

Hope it helps!

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[Matt]

Another excellent resource on this topic is the Church and Clergy Tax Guide (see www.churchlawtoday.com and then click on the Bookstore link to the right). It costs $29.95 but is well worth the expenditure. This guide will give you the definitive answer on whether you should give the Pastor a 1099 or W-2. In nearly all cases the pastor should get a W-2.