What comes to mind when you think of the fall season? In many parts of the country fall means temperatures dropping, shorter days and pumpkin spice lattes. The arrival of fall should not only bring these things to mind but should remind your church to begin year end payroll preparations.
Take a look below at the year-end payroll items your church should be aware of:
Review Employee and Independent Contractor Information
Before the end of the year it is important that all employee and independent contractor information is reviewed to confirm the accuracy of the W2s produced. Most payroll companies have a W2 verification report that can be produced and used to verify information. The following items should be reviewed:
Name- Is their name spelled correctly and does it match the name on their social security card?
Address – Is this their most recent address?
Social Security Number – Does their SSN match the number on their Social Security Card?
Year to Date Taxes – Do the taxes listed match what each employee has had withheld?
Year to Date Pre-tax amounts – Does the earnings totals match the total of what has been paid throughout the year for housing (for clergy), salary, and other earnings?
Provide Payroll service with any additional compensation given during the year
When employees receive additional compensation throughout the year those funds can often be missing from their W2. These funds should be provided to their payroll service so they can be added to their W2 totals. The funds that are often missing are:
o Manual Checks
o Bonuses (taxable for SS and Medicare for non-clergy employees)
o Gifts (such as Clergy Appreciation)
o Taxable Fringe Benefits (Car allowance, moving expenses)
Once the current year information has been reviewed, it is important to contact your payroll company with any changes that should be made for the W2 and 1099-MISC forms. Employee information changes, tax settings, housing allowance designations and salary changes should all be reviewed and changes provided to your payroll company prior to the start of the new year.
Also, if applicable, provide your payroll company with any tax notices you have received from your state or IRS with changes to the tax frequency for your church. These changes are often based on the amount of tax liability due during each period. The IRS sends a letter when a change in frequency is required, and your payroll provider should be able to make these changes for the tax set up for you.
Wisdom has found that 60% of church payrolls are set up incorrectly. Is yours? As you look at year-end payroll items consider allowing Wisdom to partner with your church and provide a complimentary review of your church’s payroll. If you are interested in this complementary review, simply send an email to Bill, and we will contact you for the review.