Each November, churches everywhere look forward to all the festivities that typically accompany the beginning of the holiday season. Finally, everyone on the church staff will see the results of the months of planning and preparation for this special time of year. Seeing the church transform almost overnight is magical, as the decorations appear right after Thanksgiving. There’s a buzz about the women’s ministry’s traditional tea or dessert. Attendance climbs as relatives are willing to visit the church to see the children’s choir. Of course, there’s Christmas Eve, that joyous time when everyone’s happy as they walk into church, the music is familiar, the message is usually a bit shorter, and we marvel at the indescribable gift of Jesus.
But it’s not just the ministry side of the church that gets busy during the holiday season; plenty of administrative tasks need attention to ensure a smooth transition from one year to the next. While the list of year-end tasks ranges depending on numerous factors, the following list contains the top five tasks to start in November to help ease into the New Year.
Housing Allowance
Currently, the IRS allows ordained or licensed clergy to designate a portion of their ministerial income to a housing allowance. The amount specified as housing is excludable from gross income for income tax purposes for the employee. However, housing allowances must obtain approval by the board or church governance before January 1. Starting the process in November ensures the ordained or licensed clergy time to calculate the amount to designate and time for the board or church governance to approve it. (Churches can learn more about the ins and outs of a housing allowance at Church Law and Tax.)
Donation Statements
While no law requires churches to provide donors with a donation statement, there are many good reasons to generate them. For one, it gives the church another opportunity to thank its donors for their generosity. Another reason is to use the end-of-the-year statements as an opportunity to encourage generosity at times when people are generous. November is a great time to map out a communication plan to inspire generosity and inform the church of the giving cut-off dates.
Start the letter or email showing how their donations allowed the church to fulfill its mission through examples. Use the letter as a time to celebrate accomplishments within the church made possible by their donations. Thank them for their contribution, and then prepare the donors for the end of the year by:
- Reminding them how many Sundays remain in the year.
- Providing cut-off dates: Remind donors that gifts received or postmarked by December 31 fall on the current giving report and that gifts received and postmarked after December 31 will show on next year’s donation statement.
- Since most churches use a ChMS (Church Management System) to provide donors with instructions on receiving the donation statement electronically.
Prepare for Compensation Changes
January 1 often ushers in wage changes through cost of living adjustments (COLA), merit increases, or minimum wage increases imposed at the federal or state level. As mentioned above, approved housing allowance changes begin on January 1 as well. In addition to preparing for compensation changes, it is a great time to remind employees to review their withholdings and, if necessary, submit new W4s. Whatever the scenario, develop a plan so that employee earnings are correct when the new year begins.
Prepare for W2s
The W2 is the IRS form the employer (church) prepares for each employee that includes all amounts of income and the amount of federal, state, social security, and medicare tax withheld. The end of the year is a great time to validate the addresses of employees, even those no longer working at the church.
Prepare for 1099s
The 1099 is the IRS form the employer (church) prepares for each contractor (excluding corporations) who received at least $600 or more in non-employment income. November and December are the perfect times to determine who qualifies for a 1099 and ensure the church has the correct information on file.
While this list is not exhaustive, it places the church operations team in a better position to meet mandated deadlines, encourage generosity, and ensure a smooth transition from one year to the next.
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