Upright Ministries
Saturday, August 19, 2017

Tips Worth Knowing

 

Annual Inflation and Mileage Update 2015

The IRS makes adjustments annually for certain tax items that are required to be inflation-adjusted.  The table below provides the inflation-adjusted amounts for 2015 that are most relevant to nonprofit organizations.

 

 
  • 2014 Standard Mileage Rates Announced

    The Internal Revenue Service issued the 2014 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical, or moving purposes.

    Beginning on Jan. 1, 2014, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

    56 cents per mile for business miles driven
    23.5 cents per mile driven for medical or moving purposes

    14 cents per mile driven in service of charitable organizations

          The business, medical, and moving expense rates decrease one-half cent from the 2013 rates. 
 

  • Though Congressional action averted many tax increases for the middle class, the reduced employee FICA rate and SECA rate were allowed to expire.  Consequently, all employees will see a 2% increase in the FICA tax charged against their compensation, and the self-employed will pay 2% more in SECA tax.

    The IRS has issued revised withholding tables to conform to the tax increases on higher income individuals.  These revised tables should be used as soon as possible, but no later than February 15, 2013.

    Additional Changes:
      - Business Mileage Rate for 2013:  56.5 cents per mile
      - Moving & Medical Mileage Rate:  24.0 cents per mile
      - Charitable Mileage Rate:  14.0 cents per mile
     
  • As a reminder, in 2008, the Consumer Product Safety Improvement Act ordered new federal safety standards for full size and non-full size baby cribs to help keep children safer in their cribs and prevent deaths resulting from detaching crib drop-sides and faulty or defective hardware.  These safety standards apply not only to cribs in homes, but also church daycares and/or nurseries.
     
    The safety standards are being implemented in two phases.  While the first phase went into effect in June 2011 and applied to all cribs manufactured and sold or leased in the United States, the second phase will take effect Dec. 28, 2012.  This requires organizations to replace their existing cribs with ones that meet the new safety standards. 
     
    Upright Ministries wants to make sure you are aware of and are complying with this new crib rule.   It is applicable if the church owns or operates a child care center, daycare or nursery and charges a fee for its services.  If you do not charge a fee, but your child care workers are paid, the new regulations also apply.  However, if the child care arrangement at your church involves unpaid volunteers, including parents and other members of the church caring for children, the new crib regulations do not apply.  Given the dangers involved, the recommended risk management practice is that churches discontinue their use of non-compliant cribs, regardless of their child care arrangement. 
     
    Because the new rule will require many churches to replace old cribs, we felt it was important to share with you so you could begin having conversations with your staff to ensure proper actions are taken prior to Dec. 28. 
     
    For additional information, please visit the U.S. Consumer Product Safety Commission, Crib Information Center website.

  • Some states mandate that employees be granted both time off and pay, while others require only time off (unpaid) for voting. A number of states provide that time off is only guaranteed if the employee does not have enough time to cast a ballot outside regular working hours.

     

    Texas: employers must allow employees paid time off to vote if the employees do not have two consecutive hours to vote outside of their normal working hours in which to vote. If the poll hours are not open as above and the employee must use work time to vote, the employer must pay the employee for the time used for voting at the regular wage rate. State agencies must allow each agency employee sufficient time off to vote in any national, state, or local election, without a deduction in salary or accrued leave. Employers are also prohibited from threatening to penalize an employee for taking time off to vote. (Tex. Elec. Code § 276.004; Tex. Gov. Code § 661.914).

  • Social Security Taxable Wage Base for 2013
     

    Some other changes that take effect in January of each year are based on the increase in average wages. Based on that increase, the maximum amount of earnings subject to the Social Security tax (taxable maximum) will increase to $113,700 (up from $110,100 in 2012).

    Social Security and Medicare Withholding

    The temporary reduction in Social Security tax withholding for employees (4.2%) is set to expire at the end of the year. The Middle Class Tax Relief and Job Creation Act of 2012 extended the reduction through the end of 2012. Under current law, this temporary reduction expires on December 31, 2012.

    Beginning on January 1, 2013, the Social Security tax rate for employees will increase to 6.2% on wages up to $113,700 (old-age retirement, survivor and disability benefits) and 1.45% for Medicare tax (hospital insurance) for total wages regardless of the amount. Employers and employees will contribute equally to Social Security and Medicare funds in 2013 (7.65% combined rate for Social Security and Medicare). For self-employed, the combined rate will be 15.30%.

    The Social Security Administration has announced that the monthly benefit for Social Security and Supplemental Security Income will increase by 1.7 percent in 2013.

  • Supreme Court Upholds Individual Mandate in Affordable Health Care Act
    June 28, 2012

    The Supreme Court has upheld the individual mandate in the Patient Protection and Affordable Care Act (PPACA), President Obama's signature health care legislation.

    That mandate generally requires most U.S. citizens and legal residents to maintain minimum essential health insurance coverage for tax years ending after Dec. 31, 2013, or pay a penalty.

    Under the PPACA, employers with 50 or more employees must provide minimum essential health coverage.  Organizations have just 18 months before these provisions go into effect.
      

  • IRS Announces Mileage Rates for 2012
    The Internal Revenue Service has issued the 2012 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.
    Beginning on Jan. 1, 2012, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:
    • 55.5 cents per mile for business miles driven
    • 23 cents per mile driven for medical or moving purposes
    • 14 cents per mile driven in service of charitable organizations
    The rate for business miles driven is unchanged from the mid-year adjustment that became effective on July 1, 2011. The medical and moving rate has been reduced by 0.5 cents per mile.
     
  • As we approach the end of another year, there are some important tasks that should be included on your “to do” list. Don’t forget to:
      - Complete all your year-end transactions to be sure they are reportable on your income tax return. This includes non-cash compensation to employees that need to be taxed.
      - Designate the portion of each minister’s compensation as a housing allowance by Dec 31.
      - Remind your donors to deliver checks on or by the 31st of December in order to claim a charitable contribution for 2011.

    If you have a minister or lay worker who is treated as self-employed for federal income tax reporting purposes, but who you would like to reclassify as an employee, the ideal time to make the change is on January 1, 2012.
  • The Internal Revenue Service has increased the optional standard mileage rate that employers can use to reimburse employees who drive personal vehicles for business purposes.
     
    The IRS increased the rate to 55.5 cents per mile for travel occurring between July 1 and December 31.
    The rate was 51 cents for January 1 to June 30.
     
    Many churches handle mileage reimbursements under an accountable arrangement, in which pastors and staff keep travel logs and submit them for reimbursements at least every 60 days. Under this arrangement, the church is not required to report the reimbursements as income on employees' Forms W-2 .
     
    Travel logs should include date, destination, business purpose of trip, odometer reading at the start of trip, odometer reading at the end of the trip, and total miles driven on the trip. 
     
    If you are reimbursed for mileage but not required to submit documentation, it is a non-accountable plan and must be included on the W-2 as taxable income.Texas is an At-Will state, which means employers are free to fire employees for any nondiscriminatory reason unless an employment agreement or contract specifically says otherwise.  But did you know that by promising an employee a better schedule or telling him/her that they will be retained for a specific period of time could actually create a contract and jeopardize your  At-Will status?  Be careful in the wording of your Personnel Policy and in verbal communication to protect your organization from this risk.
     
  • Each year as Spring approaches we think of the saying, “April Showers Bring May Flowers”.   If you work in the business office you also know that April brings with it several important dates from the Internal Revenue Service. Don’t forget to mark your calendars for the following:

    Due April 15
     Federal Income Tax and Self-Employment tax returns by individuals for calendar year 2010
     Last day to file an amended federal income tax return
     Churches must make quarterly estimated tax payments if it expects unrelated business income tax liability for the year to be $500 or more. Use IRS Form 990-W to figure estimated taxes.
     Ministers who have not elected voluntary withholding and self-employed workers must file quarterly estimated federal tax payments for 2011.
     
    Due April 29
    Churches hiring their first non-minister employee between January 1 and March 31, 2011, may exempt themselves from the employer’s share of FICA taxes by filing Form 8274 by this date.
     
    Due April 30
     Churches with non-minister employees (or one or more ministers who report their federal income taxes as employees and who have elected voluntary withholding) must file an employer’s quarterly federal tax return (Form 941) for the first calendar quarter of 2011 by this date.
     
  • This is the month to make sure you are withholding the correct amount of taxes from your employees. New for 2011 only is the amount withheld from both ministerial and non-ministerial employees.

    Non-ministerial employees: The OASDI portion of social security tax is reduced from 6.2% to 4.2% on wages earned up to $106,800 for 2011 only. The Medicare rate remains 1.45% for 2011. The change does not apply to the employer (church) FICA tax rate of 6.2%.

    Ministerial Social Security Taxes: For 2011 only, the self-employed social security tax is reduced from 12.4% to 10.4%. This parallels the two-percentage-point reduction in the social security portion of the employee’s FICA tax, from 6.2% to 4.2%. There is a ceiling rate on the amount subject to Social Security tax of $106,800 for 2011, but no limit on the Medicare tax.

    If you are using a Church Management Software system to calculate your payroll taxes, make sure the tax tables are set up correctly. A call to your software company will provide the answer. Ask them to coach you on how to verify the tax tables yourself. Once you run payroll you might want to do a quick manual calculation to ensure the proper amounts have been withheld. Remember—it is not the responsibility of the software company to make sure you are withholding taxes properly. The burden falls on the organization that is withholding the payroll taxes.

    On the lighter side: Did you hear what the one cow said to another as they sat under the shade of a tree? “I hear the budget will not be balanced until we come home.” 

    Have a Happy 2011!
    Important end-of-year action items for churches and church schools. 
         - Donations must be received or postmarked no later than December 31, 2010 to be eligible for 2010 contribution credit.
         - Cash & cash equivalent (ie. gift cards) Christmas gifts are not considered de minimis fringe benefits regardless of the amount & must be included as taxable income on employees’ W-2 forms. 
         - Be sure to include in your employee’s taxable income the cost of group-term life insurance for coverage in excess of $50,000. This additional income is subject to Social Security and Medicare so it is best not to wait until the last paycheck. For instructions on calculating, refer to IRS Publication 15-B.
         - It's a good time to make sure you update your W-4’s & approve those Housing Allowances for 2011.
         - Forms W-2 and 1099 must be provided to recipients by January 31, 2011.
  • Don’t forget to train your volunteers and employees on how to reduce the risk of Child Sexual Abuse and Harassment.  Remember that a good plan includes more than a background check.  To maximize the reduction of Child Sexual Abuse your plan should include four components:

                1. Applications and Hiring Process                  2. Supervision of volunteers and employees
                3. Employee and Volunteer Training               4. Responding to an Allegation

          Make sure your plan includes training on how to respond to an accusation.  
          Don’t just rely on background checks.

  • What if one of your employees is disabled by a job-related illness or injury?  The law says that injured workers are entitled to wage replacement benefits as long as they are totally or partially disabled. Can your church or organization afford to pay for medical/vocational rehabilitation and the return to productive employment?  As an employer, you must provide medical care to workers for restoration to their former physical condition. Consult with your Insurance Agent today to insure coverage of Worker’s Compensation Insurance.
     
  • Did you know that the IRS has a whole section on their website dedicated to Churches and Religious Organizations?  One publication you might really enjoy is the Tax and Legal Guide for Churches and Religious Organizations.  This publication covers many topics of interest including but not limited to tax exempt status, unrelated business income, compensation to minister’s, and filing requirements.  Click here to take a peek at much more.
     
  • To Lower Your Risk We Recommend:  Review your current policy to assure employment practice coverage is part of your coverage.  If it is not included, contact your insurance agent to request a quote for employment practice coverage and defense reimbursement coverage.  If you are unsure about your insurance coverage or don’t understand how to decipher your coverage, ask your agent to assist you.
     
  • Consider protecting your organization by implementing a sexual harassment policy that provides for zero tolerance of sexual harassment, and educate your staff as to what constitutes sexual harassment.  Clearly communicate the sexual harassment policy and the complaint procedure to all employees.
     
  • Under the Fair Labor Standards Act (FLSA), the federal minimum wage for covered non-exempt employees increases from $6.55 per hour to $7.25 per hour effective July 24, 2009.  Many states also have minimum wage laws.  
     
    If the employee is subject to both the state and federal minimum wage laws, the employee is entitled to the higher minimum wage rate.