Church and W-2 preparation

[cpabsd]

A local bookkeeper has been preparing the W-2's for a local church following normal employer rules. The pastor's income and housing allowances have not been treated properly. I explained the rules regarding proper reporting and treatment. They switched from a bookkeeper to another CPA in town. I had to teach the new CPA how it should be done, properly. New CPA did the forms properly for 2012. Sr pastor does not like the results. So, for 2013, they are going back to old way of doing it. Old way is flat out WRONG!!!. I lost the account because I would not prepare in the wrong way. Very frustrated that the church is willingly preparing the quarterlies and W-2's wrong. Sometimes, it just feels like the good guys never win.

End of rant - thanks for listening. Now, must get back to preparing the returns that are in my office.

PS - All this came to light because one of the pastor's is my individual client. He is staying with me though. He is just as frustrated!!!

[RitaB]

What were they doing incorrectly? It is hard to imagine a church not understanding clergy taxes (yuk, yuk), or a clergy member not being satisfied with the tax laws in place (totally serious on that one). I guess the problem is the senior pastor, and not your client in your case, though.

I had a pastor come in yesterday with info to complete 2009 - 2012 returns and a note to call the church treasurer so he could explain housing allowance rules to me. Yeah, I'll get right on that.

She also had an unopened, returned 2007 return, apparently the IRS PO Box was closed by the time she got around to mailing her return. It was returned in 2009, and she hadn't bothered to call or anything. I opened it, noted no check to IRS, gave her a new envelope, said, "Hey, you really ought to put a check in there for Caesar, Jesus said to do that, right?"

She laughed, "Shut up, I know."

I thought, "Oh, so you knoweth to doeth good, and doeth it not." But, I just let it go... I keep chanting that these days. Let it go. Let. It. Go.

[BulldogTom]

Am I the only one who would be scared to meet Rita on about April 10th? I really enjoy reading your posts, but man, you seem to be on the fringe of doing some real harm to the next person that ticks you off.

Tom

Hollister, CA

[RitaB]

Am I the only one who would be scared to meet Rita on about April 10th? I really enjoy reading your posts, but man, you seem to be on the fringe of doing some real harm to the next person that ticks you off.

Tom

Hollister, CA

I said I was letting it go. Get off my back.

[komtax]

I feel your pain about loosing out by trying to do the right thing. My practice has been steadily declining as a result. For the past two years i've looking at income sources other than taxation.

[jainen]

>>Sr pastor does not like the results<<

I can't resist a chance to play Devil's advocate in advocating for the Sr. pastor! The original post does not actually explain what might be wrong. "Housing allowance" is not a magic password. There are certain rules that a church might have failed or might not even want to meet, such as designating a specific dollar amount prior to payment. Church officials would be in a good position to know, so I wouldn't second guess the decision.

[BulldogTom]

I said I was letting it go. Get off my back.

Like I said, I am glad you are 2 time zones away.

Tom

Hollister, CA

[RitaB]

Like I said, I am glad you are 2 time zones away.

Tom

Hollister, CA

You should be, Sunshine.

[J. Ron]

I always advise churches to ask a question, "Do you understand the minister's dual tax status?" If they do not I advise them to find someone who does. Unless a person understands the status the W-2 will always be prepared wrongly.

[Randall]

A lot of small unaffiliated churches do things on the fly. They may pay someone a 'housing allowance' and have 'heard' the minister doesn't have to worry about tax. Yes, when they hear how it should be done, they're not happy. Either because of the tax or the paper rigamerole they have to go thru.