Church & Clergy – End of the Year Tax Checklist
December is a very busy time for churches and clergy. Extra services, Christmas shopping and holiday parties can fill your schedule before you know it. The end of year is an important time of the year for financial/tax issues as well. Here are a few things churches and clergy should be thinking about as we approach the end of the year.
Christmas Gifts To Employees
- In almost all cases, Christmas gifts given from the church to its employees are taxable income and need to be reported on employee’s W-2 form.
End of the Year Contributions
- December 25 will be the last Sunday for 2011 charitable contributions. Donations/offerings made on during Sunday, January 1, 2012 services will be counted as 2012 charitable contributions(even if you wrote the check in 2011). If you mail contributions, they need to be mailed in 2011 for it to be counted as a 2011 charitable contribution.
- January 1 is the ideal time to change the classification of an employee.
Revised W-4 Forms
- If employees want to change the amount withheld for taxes in 2012, they should fill out and submit a 2012 W-4 form to the church.
- Inform members of your congregation that they need to wait to file their taxes until their “2011 Yearly Contribution Summary” is available. This summary will have a complete listing of 2011 charitable contributions made to the church.
- Every year, the church should approve a housing allowance designated by its clergy. A clergy’s housing allowance expires at the end of each year. In order to have the housing allowance automatically redesignated, the phrase “I request that the amount shown above be designed for housing allowance for the calendar year 2012 and all future years until modified or revoked” should be included in the designation. A housing allowance cannot be set up retroactively. To designate/alter your housing/parsonage/manse submit a 2012 Housing/Parsonage/Manse Allowance Form to your church’s finance committee for approval.
- Clergy are allowed to have taxes voluntarily withheld from their taxes in lieu of making quarterly estimated payments. If a clergy prefers this optional withholding method, they should submit a W-4 to the church. On “Line 5” write exempt and on “Line 6” write how much you want withheld from each check.