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How do you add a monthly budgeted travel amount to payroll? Or is it better to issue a monthly check? As I understand monthly travel is not an income and if travel can be added to payroll, how do you make sure the travel amount is not taxed or included in the 941 figures.

Thank you.

fbctnc wrote: ↑

Mon Feb 05, 2024 2:43 pm

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How do you add a monthly budgeted travel amount to payroll? Or is it better to issue a monthly check? As I understand monthly travel is not an income and if travel can be added to payroll, how do you make sure the travel amount is not taxed or included in the 941 figures.

Thank you.

A few questions:

1. Is this a reimbursement, if so, its not taxable, but you must have the employee maintain records .. see IRS Pub 15, Circular E for details requirements. However, if its not a reimbursement, i would definitely see where it falls under 'benefits', as it may be taxable.
I'm going to proceed as if this is a normal reimbursement of mileage using the standard IRS mileage amount.
2. To set this up you add a new Item Description, under Maintain Item Descriptions, it will be income, you would attach the correct Expense Account, and then for the tax options, select non-taxable. You're done with this part.
3. In Maintain list of employees go the the employee(s) that will be getting the reimbursement. Select the Pay Items tab, and click on the add button at the bottom of the item list, select the reimbursement item from the Income list, click next, select SALARY for the rate type, and leave the amount at zero.
4. When you're ready to run payroll, you'll process payroll as normal, but when you get to the Enter Salary Payroll step, you'll enter the amount of reimbursement at that time. It will not be taxed in any way.

From what I can tell over the years travel for the minister has either been paid at the current IRS mileage rate or the budget has included an annual budget and the minister was paid 1/12 of the budget each month. Is there a correct/preferred method?
If travel is not a normal reimbursement for mileage as you indicated in your reply, how should a monthly travel check be set up and run through payroll.
Thank you.

fbctnc wrote: ↑

Tue Feb 06, 2024 10:51 am

From what I can tell over the years travel for the minister has either been paid at the current IRS mileage rate or the budget has included an annual budget and the minister was paid 1/12 of the budget each month. Is there a correct/preferred method?
If travel is not a normal reimbursement for mileage as you indicated in your reply, how should a monthly travel check be set up and run through payroll.
Thank you.

If the funds were given without any accountability or mileage, I'm not sure that the IRS would see that as being non-taxable. That is the issue, it would be seen as taxable income since it was given to the employee without any documentation of how it was used. My advice is to talk to a tax advisor or review the IRS Pub 15 and its related documents.

I do know that in the 4 churches I've setup for Powerchurch accounting, it was made policy that any funds paid for travel using a private vehicle was on a accountable reimbursement basis at the current IRS mileage rate.

This is very helpful and it worked perfectly on my part.
However, about the 941. If this mileage reimbursement is set up by going to Payroll>Setup>maintain item description>Item no=28>description=Associate Pastor mileage reimbursement>type=income>tax options =non-taxable, does checking non-taxable prevent the amount from being included in amounts for the 941 and do amounts show on the Item Summary Report?

Again, thank you for your help.

fbctnc wrote: ↑

Tue Feb 06, 2024 2:45 pm

This is very helpful and it worked perfectly on my part.
However, about the 941. If this mileage reimbursement is set up by going to Payroll>Setup>maintain item description>Item no=28>description=Associate Pastor mileage reimbursement>type=income>tax options =non-taxable, does checking non-taxable prevent the amount from being included in amounts for the 941 and do amounts show on the Item Summary Report?

Again, thank you for your help.

For taxes, it is not even looked at for Federal or state taxes in any way, shape, or form. It is shown on the item summary report as its IS a payroll item.