FCA - Meals, Gifts, and Online Donations

Published: Tue, 06/11/19

FreeChurchAccounting.com

Accounting for Churches and Nonprofits

June 2019 Edition

Sharing the top 3 questions that I am asked by new clients:

1. Can we reimburse our Pastor for his meals?

That depends =)

Almost all churches and nonprofits have an expense account titled "Pastoral Meals", "Meals/Entertainment" (by the way...if you are using this account title...you might want to change it to something like "Meeting Meals" because of the new tax laws making some entertainment expenses taxable to the employee), "Travel Meals", or something similar.

That is not money set aside for the Pastor or Director to eat lunch on everyday...or at least it shouldn't be =)

It should be a "church" (business) expense and there are some things that MUST be in place for your organization to lawfully and properly reimburse or pay for those meals. Click "read More" below and scroll to the bottom of the article for more important details...

Celebrate Summer by saving 20% on the Church Accounting Package COMBO Package, and Spreadsheet Package!

Use the discount code:

SUMMER

Valid through 6/30/2019

2. Would you classify this as ministry support?

I get this question in one form or another almost every month ...

"We brought someone in to help lead worship for a conference. He doesn’t have a ministry per say, but we wanted to bless him for his time and service. Would you classify the amount we gave him as a love gift and not taxable to him?"

My reply, "Because he performed a service for the love offering ...the IRS will require you to 1099 him...if you gave him $600 or more "collectively in a calendar year".

Client's reply, "Just to clarify, he didn’t require any payment/gift, but the spirit of it was we gave it response to his service. We also gave an offering to a preacher, and our gift was in response to his preaching at our church (although he too required no fee/offering). Will he need a 1099 since our gift was in response to his service?"

My reply, "You will be required to send 1099s to both of them (if love gifts were at least $600) as both "gifts" were for a "service" performed FOR the church.

NOTE: ALL churches/nonprofits are required to obtain a completed and signed W-9 from anyone that they give a love offering to ... if some kind of service was performed for the "gift" such as a guest minister or musician, etc. (EVEN if they do not expect to pay them much!) They can mark if they are a individual, corporation, etc. (you are not required to process 1099s for corporations and nonprofits).

Click on the "Read More" below for more on the taxability of love gifts...

Save 10% on the resource book: Using QuickBooks Online for Small Churches and Nonprofits by using the discount code: FCA

You can also bundle the QBO book with our "How To book" for even more details on handling contributions, minister compensation, etc. Just click on the radio button that says: Add Church Accounting: The How-to Guide and save $5 under the

"Save money by bundling your purchases" headline!

Click Here to Purchase!

3. How do I account for online donations and the processing fees?

If you are tracking donor/donations with your accounting software, you have to make sure your donor gets credit for their full donation...even if your online giving processor withholds processing fees BEFORE they deposit the net proceeds.

In Aplos, the process is simplified. That software has a place to enter processing fees and the software automatically gives full credit to the donor and subtracts the fees and shows the net deposits in the accounting register.

However, there is a process you must follow if you are tracking donor/donations in QuickBooks Online or something similar.

Click "Read More" below and scroll to the bottom of the page (above the Comment section on that page) for more details...

Church Donation/Member Database

Need a database that is easy to use and understand and affordable?

Shepherdbase provides churches with a simple and easy solution to track church contribution records and membership information.

Accounting | Administration | Donations | Ministers