53 Pay periods this year

[Blessed]

Hi! I'm using Power church 11.55. The year 2016 started on a Friday which was a pay date(weekly) for us. This makes 53 pay dates in the year. It increases the annual salaries and the housing allowance that is set. I don't think this has happened in about 6 years, which was before I started. Is there a rule or special way to handle this?

[NeilZ]

Hi! I'm using Power church 11.55. The year 2016 started on a Friday which was a pay date(weekly) for us. This makes 53 pay dates in the year. It increases the annual salaries and the housing allowance that is set. I don't think this has happened in about 6 years, which was before I started. Is there a rule or special way to handle this?

The Friday payday should have been accounting for in the 2015 budget as that's where it really belongs. I'm assuming this is for salaried employees? Nothing should have changed, and 2016's budget should not have been touched.

FWIW ... this is why many churches (and businesses) pay on a twice a month basis. The 15th and last day of the month for both salaried and hourly workers.

[Blessed]

Hi! Yes Neil it is for salaried employees. And the pay period is from Sat to Friday which crossed into the year 2016. 2015 had 52 Fridays accounted for and that showed on the W2 for 2015. What I'm looking at in 2016 is a W2 that includes an extra week of income, taxes, and housing for the Pastor as well. I'm concerned as this amount shows on the W2, which is not the agreed amount for housing allowance for the year. How do I show that this additional week is not a part of 2016? Or that the annual salaries have not changed for the W2? I can see how pay dates being twice a month would be helpful. I've never encountered this

[NeilZ]

Hi! Yes Neil it is for salaried employees. And the pay period is from Sat to Friday which crossed into the year 2016. 2015 had 52 Fridays accounted for and that showed on the W2 for 2015. What I'm looking at in 2016 is a W2 that includes an extra week of income, taxes, and housing for the Pastor as well. I'm concerned as this amount shows on the W2, which is not the agreed amount for housing allowance for the year. How do I show that this additional week is not a part of 2016? Or that the annual salaries have not changed for the W2? I can see how pay dates being twice a month would be helpful. I've never encountered this

In my opinion, salaried persons should not be paid weekly. Once a month, or twice a month is the norm since this eliminates this type of issue.

Did you withhold the taxes from that check, and were they reported in 2016 or reported for 2015? If he got paid in 2016, its 2016 income. It may come out of 2015's budget, but the W-2 does not reflect any budget, the W-2 reflects what was PAID to the person in 2016.

The W-2 will have to reflect in block 14 (I believe) the entire amount paid in 2016 for housing allowance. The IRS doesn't care what the budget says, it only cares what was paid.

I would talk directly with an accountant about this, as the program is just doing what it was told to do.

[Blessed]

Yes. I withheld taxes and housing allowance from that check as well, and it was all a part of 2016. I'm planning to do W2s to reflect that; I just saw a flurry of communication on a tax website regarding special considerations when a year has 53 weeks and wanted to be sure I was doing the right thing by including the extra week. I see how paying twice a month could prevent this issue in the future. Will take your advice and ask accountant. Going forward, I would like to ask board about considering a change in pay frequency. It has been this way since the church started over 20 years ago. Other than a tax issue, are there other benefits to paying twice a month?

[NeilZ]

Yes. I withheld taxes and housing allowance from that check as well, and it was all a part of 2016. I'm planning to do W2s to reflect that; I just saw a flurry of communication on a tax website regarding special considerations when a year has 53 weeks and wanted to be sure I was doing the right thing by including the extra week. I see how paying twice a month could prevent this issue in the future. Will take your advice and ask accountant. Going forward, I would like to ask board about considering a change in pay frequency. It has been this way since the church started over 20 years ago. Other than a tax issue, are there other benefits to paying twice a month?

It lessens the burden on the bookkeeper as they don't have to worry about payroll every week. We also don't worry about exactly when the checks are issued. Yes we say the 15th and end of the month, but if those days fall on a weekend, we just pay on the Friday previous to the 15th or the end of the month.

An accountant can give you more specifics.

[Blessed]

Ok. Thanks so much for the information. I really appreciate your knowledge and willingness to share. Have a great day!