Another tuition question
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Another tuition question
The church will be taking over the operation of a school next month. There are several teachers who pay no tuition and get no salary. They are employees. How do I manage this in Power Church?
Re: Another tuition question
Um .. they should be paying taxes on what they are getting as it is considered income, plus you should be paying employer taxes. How is this handled now ?tbcbrown wrote:The church will be taking over the operation of a school next month. There are several teachers who pay no tuition and get no salary. They are employees. How do I manage this in Power Church?
Neil Zampella
Using PC+ since 1999.
Using PC+ since 1999.
Re: Another tuition question
I thought that also until I found this article. Tell me what you think.
http://www.nais.org/Articles/Pages/Tuit ... nefit.aspx
http://www.nais.org/Articles/Pages/Tuit ... nefit.aspx
Re: Another tuition question
Um .. I'm fairly sure that what they mean as 'tax-free' means that it is a BENEFIT that normally is taxable, but is not. The person does get a normal salary, and pays taxes on that.tbcbrown wrote:I thought that also until I found this article. Tell me what you think.
http://www.nais.org/Articles/Pages/Tuit ... nefit.aspx
I would definitely get the opinion of a qualified tax lawyer or accountant. The church could be held liable for NOT paying federal, state or local taxes.
Neil Zampella
Using PC+ since 1999.
Using PC+ since 1999.
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Matt
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Re: Another tuition question
The top of page 4 of this article specifically states that "Employees may not be given the option of reducing their salaries in
exchange for a qualified tuition reduction." So as Neil says below the church should be recording the salaries, withholding Federal, State, and Local taxes as appropriate, and paying the employer's share of the Social Security and Medicare taxes. If the desire is to use the employee's net pay as a qualified tuition reduction then the church should set up receivables for the gross amount of the tuition in the Accounts Receivable module and then record payments in the amount of the net pay each time payroll is run. The net between the net pay recorded in Payroll and the payment recorded in Accounts Receivable on the tuition is zero so no actual check needs to be written. But the W-2 and payroll tax reporting will be done correctly this way.
exchange for a qualified tuition reduction." So as Neil says below the church should be recording the salaries, withholding Federal, State, and Local taxes as appropriate, and paying the employer's share of the Social Security and Medicare taxes. If the desire is to use the employee's net pay as a qualified tuition reduction then the church should set up receivables for the gross amount of the tuition in the Accounts Receivable module and then record payments in the amount of the net pay each time payroll is run. The net between the net pay recorded in Payroll and the payment recorded in Accounts Receivable on the tuition is zero so no actual check needs to be written. But the W-2 and payroll tax reporting will be done correctly this way.
Re: Another tuition question
Thanks for the input. I passed this along to the CPA for a ruling. If this has to be counted as income, there are going to be some very unhappy teachers as where they previously taught didn't recognize it as income.