Payroll Setup

[wmorgenstern]

We are just starting to use PowerChurch.
I am still busy designing the Chart of Accounts, and the Contribution Funds, and the biggest issue: Payroll.
The previous program we used (QuickBooks) did not work for our church, because it matched Social Security, and MediCare (and I am not even sure if MediCare applies to credentialed ministers). This should not be matched, as a minister is responsible for the whole amount. I am not sure if Federal Taxes do.
So the way I was thinking to set it up, is only have the State of Michigan Taxes apply to the Payroll, and then add a fixed amount every paycheck. This amount is determined by the minister himself, and then PowerChurch should deduct this fixed amount.
Then the minister is himself responsible for the IRS communication and payments.
I am not even sure what the law says. Maybe somebody can help me with the setup in PowerChurch.

Werner Morgenstern
Harvest Ministries Church of God
Farmington Hills, MI

[Matt]

If you can describe how you calculated the amounts in boxes 1, 3, and 5 and tell me whether there were amounts in boxes 2, 4, 6, 12, 14, 17 or 19 on your minister's W-2 for 2003 I can advise you on how to set up the payroll for him.

[wmorgenstern]

Basically I am not sure what income is taxable and what is not, and what is taxable under Social Security or Medicare.
Our ministers get a Gross Salary, a Housing Allowance, and two of the four get a phone allowance once a month.
Then two get health insurance allowance of $700.00 (which they themselves pay for wherever their health insurance is). However, for one minister we pay through the denomination an amount (more than $700.00). but the cap is set at $700.00. So he has to pay the church back whatever is above $700.00. We set it up that way apparently, because this way the liability is on the church, so the 700.00 is not taxable.

Thanks
Werner Morgenstern

[Matt]

To set up the Payroll we have to know what income is taxable and what's non-taxable. We need to get answers on this for your situation before we can proceed. I suggest researching the IRS website or talking to another local church in your area that pays ministers similar to how you do.

[foxygramps]

I seem to remember that someone (CRC Group)? publishes a book on the subject of ministers tax's and how to handle them. Sorry that my memory isn't any better than that. Might be worth a search on "Christian Computing" magazines web site.

[franthecat]

There is a book on clergy taxes that is updated every year. I highly recommend it.

Church and Clergy Tax Guide
704-821-3845
http://www.churchlawtoday.com