The pastor’s Housing Allowance is confusing to pastors, church members and many times to tax preparers, too. Here is an article that explains it for you.
As you consider your pastor’s salary please investigate designating some or all of your pastor’s salary as Housing Allowance. It costs the church nothing and is a tremendous tax benefit to the pastor. We highly recommend that the church and/or pastor consults a tax preparer who truly understands this unique aspect of pastoral taxes as it could potentially save the pastor $1,000s. Call Generate at MCUSA HQ (260-747-2027) or email firstname.lastname@example.org if you need help finding someone.
Although our focus is on the multiplication of disciples, we all have to deal with many business and physical matters as part of our ministries. These matters include protecting our people, assets, facilities, and reputations with safe ministry programs and comprehensive church insurance. As an independent church family responsible for your own decisions, we ask that you carefully consider whom you select as your insurance provider in a prayerful and faithful deliberation of biblical stewardship.
The unique needs for a church and its ministry require careful selection of an insurance carrier. Whether churches and related ministries, schools, camps, and colleges you will need to find a company that provides specific insurance for you and is familiar with the needs of your ministry. Numerous companies provide insurance to churches and ministries, however, from our experience and hearing from the churches in the Missionary Church, we can only recommend one of them: Brotherhood Mutual Insurance Company.
Brotherhood Mutual Insurance Company works exclusively with Christian ministries. Besides property and liability, mission travel, vehicle, and workers’ compensation insurance programs, the company also offers risk management and ministry payroll services, as well as numerous free website resources.
Periodically you will see highlights in the Priority newsletter and online addressing various topics that can help protect your congregation. Insurance is sometimes a product we buy, pay an annual premium and seldom review. Brotherhood will assist in reviewing your policy and needs for the future. For example, 84% of churches have $1,000 deductibles and could decrease premiums by increasing their deductible.
Brotherhood Mutual Insurance Company® is one of the nation’s leading insurers of churches and ministries. In business since 1917, Brotherhood Mutual provides property, liability, commercial auto, workers’ compensation, mission travel insurance, and payroll services* to ministries throughout the United States, including:
- Church day nurseries
- Christian camps
- Association/Denomination offices
- Colleges and universities
- Other related ministries
Brotherhood Mutual is represented by independent agents who subscribe to a code of ethics based on scriptural principles and serve in churches and ministries of their own. The company consistently earns an A- (Excellent) rating from A.M. Best, a leading authority in rating insurance companies.
Medical insurance is a major financial burden for individuals, pastors, employers and the nation. Please consider carefully how the church will help pastors with this area of need. We would encourage very clear conversation between church leadership and pastors about this issue and that the church makes sure that pastors have some form of coverage. An increasing number of pastors are able to be added to their spouse’s coverage at a more reasonable rate than obtaining their own and a church could pay that instead.
Setting up an HSA for the pastor is also helpful as that is pre-tax money and the church and/or pastor can contribute to it. The amount is limited to a maximum set by the IRS and HSA contributions are only possible with certain medical insurance plans.
Central, East Central and North Central churches and the denominational office are able to participate in a regional medical plan. This health plan is currently serviced through Pro-Claim Plus of Fort Wayne, Indiana and includes life insurance for participants as well. If interested in eligibility, additional information or cost of coverage, please send an email to email@example.com.
For those not able to participate in this plan, many other plans are available in the market place, from private insurance companies or various Christian medical cost sharing ministries. Depending on their specific needs, pastors have found any of these solutions to meet their requirements of cost vs. coverage. The market place and insurance companies vary depending on location but below are some links to Medical Cost Sharing Ministries.
Brotherhood Mutual has recently started providing assistance with Medical Insurance for churches. It is not on their website yet, but call them at 800-333-3735.
Most of us don’t think about Long Term Disability (LTD) until we need it. A number of examples of pastors in the Missionary Church make it very clear that not having an LTD plan in place is very difficult for the pastor (and family) if for some reason a pastor is disabled and unable to work.
Contact your Missionary Church leadership or Financial Services at Headquarters (260-747-2027 email: firstname.lastname@example.org) to find out what is available to you.
The IRS provides a tax credit for small businesses and small tax-exempt organizations. The credit may equal up to 25 percent paid by eligible small tax exempt organizations. Also, since for eligible small tax-exempt organizations the health insurance premium payments are more than the total credit, the credit is refundable.
It is advisable to talk to a tax preparer to determine if you might be eligible to receive a credit.
Below are some links to help determine if you might be eligible.
Who is eligible for the credit? Employers that…
- pay at least half the cost of qualified “single” (employee-only) health insurance coverage for their employees
- have fewer than 25 full-time-equivalent employees. For example, two half-time workers count as one full-time equivalent employee, and
- pay wages averaging less than $50,000 per full-time-equivalent employee per year.
To estimate possible credit.
Use this estimator to find out whether you may be eligible and get an estimate of how much you might receive.
How to claim the credit.
Small tax-exempt organizations use Form 8941, Credit for Small Employer Health Insurance Premiums, to calculate the credit. Tax-exempt organizations include the amount on line 44f of the Form 990-T, Exempt Organization Business Income Tax.
A number of organizations exist to support local churches or non-profits. If you are aware of any let us know at email@example.com and we’ll include it on this page. These are some that we know of:
TechSoup TechSoup’s product donation program is its most popular and it provides eligible organizations (churches are included in this) with discounted software, hardware, services, and training. Microsoft Office, QuickBooks, Adobe, Hotspots and refurbished laptops are among a few of the resources many churches have taken advantage of.
ConnectAll ConnectAll is a membership program that provides affordable computers and Internet to nonprofit organizations and low income individuals.
Verizon Wireless has a discount on cell phones and plans for non-profits. It could be a reasonable way to go. They also have a very reasonable rate to have a ‘phone attendant’ that directs the call to the appropriate person’s cell phone or landline, in some cases an office landline is no longer necessary.
Keeping Children & Youth Safe.
You can take simple steps to reduce the likelihood of child sexual abuse occurring within your church. Please make sure you have a good safety and security system in place and your people are trained. Various resources are available to you from Church Law & Tax Store.
The Reducing the Risk Kit, 3rd Edition Ministry of Christianity Today) at $129.95 is an excellent one and good value.
Keeping Your Ministry and Property Safe.
EVERY CHURCH NEEDS A SAFETY AND SECURITY MINISTRY. To help weave a security mindset into your ministry, consider following this three-step process:
- Form a group to perform a security assessment
- Identify the ministry’s security gaps
- Implement solutions to fill the gaps
Preparing for disaster in not something we WANT to do, but it is something we SHOULD consider. How to handle evacuation, imminent threats to security, armed security guards and many others are questions that the church should work through. Here are a number of free resources from Brotherhood Mutual to help in answering those questions or from Church Law & Tax.
Established in 1958, the Missionary Church Investment Foundation (MCIF) is a nonprofit financial ministry of the Missionary Church denomination serving a dual purpose. We provide low-cost loans to churches and ministries, helping them grow and extend their reach. At the same time, we give Missionary Church congregants and churches the opportunity to invest and partner in that great Kingdom work, while earning competitive interest rates.
The cost of being a denomination and of coordinating, organizing and motivating the effort of local churches in national outreach is funded through this area of the Missionary Church budget.
In addition to administrative concerns of the Fort Wayne, Indiana office, funds in this account impact church planting, ethnic ministries, compassion and benevolent ministries, Bethel College, insurance and many other areas. Local church support materials, Growing a Healthy Church workshops, Missionary Church Today and Priority all depend on the Investment in Shared Ministries fund. In fact, excluding world missions, this account supports every aspect of denominational ministry and administration!
The Network, Region or District that you are a part of adopts a budget for the operation of their ministries through their own agreed upon procedures. Local churches have a voice in this process and each church is asked to participate in giving its share of that budget. Contact your specific network connection to determine what amount this is for you.
Please contact your Region, District or Network as each has its own reporting requirements and procedures.
The Missionary Church requires each church to complete an annual report that includes contact information, some of the ministry details and a financial report. You can see more details here.
When the church employs anyone to serve a roll in the church many details need to be considered. See salary guidelines under staffing. (Embed link to that information). The church further needs to make sure that Federal, State and Local taxes are filed, correct reports are filed with the IRS, the employee receives the right tax information, etc.
Many well-meaning and capable accountants or other volunteers at a church can care for this, but it requires a well-informed individual who is keeping up with tax laws and especially with ministerial tax law. So that the church or the minister does not find themselves in trouble with the IRS we highly recommend using an outside Payroll provider such as ADP, Paychex or QuickBooks.
One provider that specializes in payroll for ministers and is used by many of our Missionary Churches is MinistryWorks, a service provided by Brotherhood Mutual.
1099 Forms. In general, a Form 1099–MISC should be sent to the payee and filed with the IRS for each person to whom an employer has paid one or more of the following: At least $600 in services, rents, prizes or awards and other income payments. Consult a tax advisor if in doubt.
Research shows that churches who align their mission with clear, accountable strategies are far more likely to reach their goals. Yet, few churches consistently plan for the future. With this material, called FOCUS, leadership teams can now go through a six-hour, self-facilitated, “game-like” process with interactive exercises to create a 12-to-24 month master plan to move their church forward. According to its creators, strategic team-based planning has never been more comprehensive, energizing, and believe it or not, fun!