Need help adding a Housing Allowance

[FBCWM]

The church recently voted to make just a portion of our Music Minister's salary a non-taxable housing allowance. I'm having difficulty figuring out how to make just a portion of his weekly check non-taxable. He is receiving no additional money from the church. I'm on the new-ish side of using Power Church and have already consulted the reference manual. I'm stuck! Any help would be appreciated.

[NeilZ]

The church recently voted to make just a portion of our Music Minister's salary a non-taxable housing allowance. I'm having difficulty figuring out how to make just a portion of his weekly check non-taxable. He is receiving no additional money from the church. I'm on the new-ish side of using Power Church and have already consulted the reference manual. I'm stuck! Any help would be appreciated.

Housing Allowances have to be an amount, you cannot enter any percentage. So if the congregation voted to set 25% of his salary as housing allowance, you need to calculate that 25%. If he's paid 10000 a year, then 2500 is Housing Allowance, since he's paid weekly, you'd divide that 2500 by 52 weeks to get 49.07 .. I'd round down to 49.00. Take his weekly salary and subtract that 49.00 to get his new weekly salary.

Then the next thing you need to do is setup an Item Description for the Housing Allowance. If the Pastor already gets a housing allowance, this item description should already be setup, so skip to Step 3, However, if the music minister does have SS & Medicare taken out, you may need to start with Step 1.

1. follow the directions on page 280 of the manual for adding a new income item. At step 6, you should choose Housing Allowance from the Tax Options if the Music Minister files their own self-employment taxes (SECA) that covers Social Security & Medicare, and your state does not tax housing allowances. If both are true, skip to Step 03. If not continue to step 2.

2. if the minister does not file SECA taxes and had Medicare & SS taken out of his previous paychecks; AND/OR you're in one of those states that tax Housing Allowance, you need to select the More Options selection. If he needs to have Medicare & Social Security withheld, select them from the tax list that appears, if you state or local tax jurisdictions tax Housing Allowance, select the state and local tax items as needed. In Pennsylvania, I have to have State & Local taxes checked for the Pastor, but do not need the SS & Medicare checked as the pastor pays SECA tax. Once this is done, click SAVE.

3. Head to Maintain List of Employees, and select the Pay Items tab. Click on the ADD button, and find the existing Housing Allowance Income Item from the list that appears, or the new Housing Allowance item you just created.

4. Edit that pay item, and select the Rate Type as SALARY, and enter the amount you calculated above, in our example its 49.00.

5. Edit the weekly salary pay item by subtracting the amount currently there by 49.00.

This should take care of everything.

HOWEVER if this is an hourly employee, it may be easier than you think. If the music minister paid $20 an hour, then $5.00 is the housing allowance. In Step 4 above, select the Rate Type as HOURLY, and enter 5.00 as the Amount. In Step 5, change the Amount to 15.00 . Then when you process payroll, the Enter Hourly Payroll screen will appear, and you'll enter the number of hours worked for both the regular salary, and the Housing Allowance.

Does this help, or is it making your brain hurt ??

[FBCWM]

That worked! Thank you!