Payroll

[Lily]

Hello lily from Hawaii,
Version 9. Our payroll is on a bi-weekly basis and now paying Pastor's appreciation each month the week after his first payroll. Do I just change the payroll to weekly when he is paid the appreciation and then change it back to bi-weekly when he is paid his next payroll Appreciate hearing from you at your earliest convience. Yes the income is noted as salary.
Aloha lily

[NeilZ]

Hello lily from Hawaii,
Version 9. Our payroll is on a bi-weekly basis and now paying Pastor's appreciation each month the week after his first payroll. Do I just change the payroll to weekly when he is paid the appreciation and then change it back to bi-weekly when he is paid his next payroll Appreciate hearing from you at your earliest convience. Yes the income is noted as salary.
Aloha lily

From what I can gather, this is paid once a month? Couldn't you create a once a month payroll item for this ??

[Lily]

Hello lily from Hawaii,
Version 9. Our payroll is on a bi-weekly basis and now paying Pastor's appreciation each month the week after his first payroll. Do I just change the payroll to weekly when he is paid the appreciation and then change it back to bi-weekly when he is paid his next payroll Appreciate hearing from you at your earliest convience. Yes the income is noted as salary.
Aloha lily

From what I can gather, this is paid once a month? Couldn't you create a once a month payroll item for this ??

How would that affect the W-2 at the end of the year? Would the amounts be separate and the Pastor receive two W-2's?
Lily

[NeilZ]

Hello lily from Hawaii,
Version 9. Our payroll is on a bi-weekly basis and now paying Pastor's appreciation each month the week after his first payroll. Do I just change the payroll to weekly when he is paid the appreciation and then change it back to bi-weekly when he is paid his next payroll Appreciate hearing from you at your earliest convience. Yes the income is noted as salary.
Aloha lily

From what I can gather, this is paid once a month? Couldn't you create a once a month payroll item for this ??

How would that affect the W-2 at the end of the year? Would the amounts be separate and the Pastor receive two W-2's?
Lily

I shouldn't think so. I'm not an accountant, but at my last church they had regular salary, then bonuses, and the W-2 checkboxes were setup the same.

[Lily]

Sorry Neil, but I need a more positive answer and if you are correct I apologize. Can I get a reply from Tom or Jeff?

Is it okay to switch bi-weekly to weekly every month for payroll or setup two separate payroll's for one employee? How should I handle this? The appreciation is not a bonus, the amount varies according to what is received that week and is considered salary income. Appreciate a response from either of you!

lily from Hawaii

[NeilZ]

Sorry Neil, but I need a more positive answer and if you are correct I apologize. Can I get a reply from Tom or Jeff?

Is it okay to switch bi-weekly to weekly every month for payroll or setup two separate payroll's for one employee? How should I handle this? The appreciation is not a bonus, the amount varies according to what is received that week and is considered salary income. Appreciate a response from either of you!

lily from Hawaii

No offense taken. However, what I meant to say that you could use the same type of setup as they did for bonuses at my last church.

It is still an item that would fall under a W-2 'salary and other compensation' entry.

[Jeff]

Lily,

If I understand the situation correctly, this amount is paid to the pastor once a month and varies each time. Does the church do any witholdings for the pastor? Some churches do no withhldings at all and the pastor still receives a W2 but pays all his taxes as self employed.

If the church doesn't do any withholding, you have nothing to do. Just add the amount once a month to his checks and you are done.

If the church withholds taxes for him it get a little trickier. I am assuming that when you say changing him to weekly you are talking about under the employee setup as to how many checks they get a year. I wouldn't change this. Here is how the program calculates taxes. Say the pastor makes 1,000 gross per pay check. The program is going to take the 1,000 and multiple it by the number of pay periods in the year. So biweekly would be 26 checks a year, that calculates to 26,000. It then figures the tax on 26,000 according to the tax table and then divides the tax by 26 to come to the amount for the individual check.

If you change the pastor to weekly and add the bonus, say for example the bonus was 250 making the gross 1250. The calculation would be 52 * 1250 = 65,000. It would then calculate the tax on 65,000 and divide it by 52 to come up with the tax amount for that check.

So all of that said. Normal practise when adding a bonus to a check is to just let the program calculate the taxes under their normal checks per year. This might result in more taxes than necessary being taken out of their check. Here is a blog post I found from someone complaining about this problem. http://thematurationofshane.wordpress.com/2008/03/10/

You do have another option. According to PUB 15 (Circular E) you can choose to withhold a flat 25% of the bonus from a paycheck. See page 14 of the 2008 Pub 15. http://www.irs.gov/pub/irs-pdf/p15.pdf. If you are withholding Social Security and Medicare you will still need to withhold those amounts from his check as well. The 25% is federal income tax only. You will also want to check to see what your state wants to do.

Neil is right all of this is going to be reported on the W2. I have just been talking about the tax caculations.

[Lily]

Hi Neil,
Thank you for understanding and I do appreciate what you had suggested. Please read on my conversation with Jeff.

Alright Jeff,

Yes the Pastor is given an appreciation once a month and the amount is not the same. I have been manually putting in the taxes after figuring it out from the Employer State Tax Guide and Circular E Federal Tax Guide in the amount to be withheld after entering NONE in the tax table field. Hope I'm doing okay and not building on something that is about to crumble. No SS or Medicare is being withheld.

Was looking at providing a paycheck every week for the first three weeks of each month. A Bi-weekly payroll and then in between is the week of the appreciation. From what I gather it would be best to keep it on a bi-weekly basis and keep doing as I have been doing.

Gentlemen, I am open to what you have in store for me that I make sure it is done correctly.

Lily

[tborgal]

If this were my situation I would speak with the Pastor and find out if it would be a problem if the appreciation payment could be included in the second bi-weekly check. If this is ok with the pastor I would just create another pay item with a name Appreciation - select the debit account you use for the paymnent and set up the W2 the same as the payroll item. Add this to the Item List for the Pastor, set it as salary and leave the amount blank, and on the second pay period of each month double click the line item and manually enter the amount due.

This is very similar to, if not the same as, what Neil was explaining in his post when he referenced bonuses. It will also overstate the withholding a little as Jeff explained in his post but this should not be a problem.

The only thing you need to be sure of with this approach, is to be sure that you check the pay items every pay period to be sure that the Appreciation line is zero on the period which you don't pay this item.

This way everything will be on one pay stub and easier for the Pastor to get a complete picture of compensation.

[Lily]

Hi Tom,

It's not a problem and I have discuss with the Pastor regarding a THREE week pay (which he wants), so his appreciation would fall inbetween his bi-weekly payroll. This is what I was trying to find out and how I could do this.

Right now it's being paid on the first bi-weekly payroll and just as you have noted as a separate pay item and the following bi-weekly payroll I would make sure there was no amount in that pay item for Appreciation.

So right now what I am doing and how I am doing the figuring of the taxes is correct?, and from what I understand your suggesting the same pay setup, but pay the appreciation on the second bi-weekly payroll?

If I understood Neil correctly I could setup another employee payroll period aside of the bi-weekly payroll for the Pastor and do it monthly. The appreciation would be done on the second week after the first bi-weekly payroll. Would both payroll period's show up on one W-2 for that Pastor?

Just want to make sure I do not miss it.
Lily

[tborgal]

The third pay period which would be paid monthly will show up on the W2 just as the two biweekly periods do. The W2 is keyed to the employee and will include all data attached to his name. The W2 does not care how many times per month you pay someone.

[Lily]

Thank youuuuuuuu! Tom and Neil,

The setup will be done as suggested in the beginning. And it's the outcome I was looking at.

Appreciate all your help ending with Aloha Lily from Hawaii