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Financial Manual
I. Annual Budget Development and Year-Round Fiscal Stewardship Focus
A. Reasons to be involved in fiscal matters | B. Common fiscal errors | C. Sample Budget | D. Budgeting Process | E. Whole-Life Stewardship Resources
INDEX
B. Common Fiscal Errors Made By Congregations and Clergy
This information is both for congregational financial leaders and for all types of clergy.
INTRODUCTION
Because we can learn from the mistakes of others, and our own, a list of common fiscal errors made by either financial officers or clergy, and sometime both together, is here provided. This can serve as an annual checklist to guard against common mistakes. It should be periodically updated.
PRESENTATION
- Providing or adjusting ministers’ housing allowances retroactively (congregation) or failing to pay tax on difference if all designated is not legitimately spent (clergy).
- Improperly classifying employees (congregation) or oneself as self-employed (clergy).
- Failure to file Forms W-2 and 1099-MISC for employees (congregation) or failure to report additional taxable income such as gifts for professional services, fringe benefits, and reimbursements (clergy).
- Not providing Worker’s Compensation where required by law and not coordinating such with health insurance coverage (congregation).
- Failing to insure that there is an annual audit of church fiscal records (congregation).
- Failure to report unrelated business income, such as revenues from rentals, day-care or educational programs, or health care and fitness programs or facilities (congregation).
- Failure to set up an accountable expense reimbursement plan (congregation) driven for personal vs.church purposes (clergy).
- Improperly opting out of social security because of private judgment on its investment value (clergy) or failing to make prescribed pension payments because of personal or corporate judgmental error (congregation).
- Deducting FICA tax from salary of qualified ministers (congregation) or improperly calculating self-employment social security tax by such mistakes as failing to include parsonage “exclusion” as SE taxable income (clergy).
- Failure to use correct tax ID numbers for both Federal and State payroll and sales taxes (congregation).
- Failure to file quarterly 1040 ES payments on current taxable year (clergy).
- Claiming an office-in-the home, a position extremely difficult to support under present law (clergy).
For detailed reference and regular update see the yearly issues of Zondervan Minister's Tax and Financial Guide and Zondervan Church and Nonprofit Organization Tax and Financial Guide, both prepared by Daniel D. Busby, CPA.
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