Dates to Know
March 30 – the Office will be closed in observation of the Resurrection
April 1 – February financial reports will be due
June 18-21 – Family Fellowship Week in Shelby, NC
Financial Report Checklist
Changes in ministry can affect the typical expenses you list on your reports from month to month. For instance, someone on deputation will primarily have travel expenses, while someone on the field may have more costs related to renting a building or purchasing snacks and Sunday School supplies. Someone coming home on furlough will be dealing with mileage, meal allowances, and lodging costs they don’t usually see when on the field. We suggest that you click here to review our checklist of commonly overlooked expenses, to be sure you are claiming all allowable deductions.
Changes in Tax Laws will affect you this year
Our CPA has given us guidance on several changes taking place for this tax year. While our staff is not qualified to give tax advice, we do seek to keep you aware of situations that may impact you financially. Please review the following information carefully, and contact us or your tax preparer if you have questions.
- Necessity of submitting MFRs
Our accountable plan has always provided a benefit to those who choose to submit Monthly Financial Reports. Those who do not participate have previously had the option to itemize unreimbursed employee expenses on Schedule A of their personal taxes. However, starting this year that is no longer an option. This means that if you have previously been submitting ministry expenses through your tax preparer, you will lose the tax benefit this year unless you begin submitting MFRs. Some ministry expenses could possibly still be used to modify self-employment taxes via Schedule SE, but those specifics would need to be discussed with your tax preparer. By far the best situation is for you to report all ministry expenses through WW, thus providing the fullest tax benefit. If you are new to submitting reports, or even if you just need a quick review, you can click here to download a handy checklist.
Please note that other personal expenses may still affect your tax return, such as health care, contributions, etc. This change specifically affects ministry expenses, such as mileage, travel, and so forth.
- Change in Entertainment Expenses
Several have asked about the change that eliminates the ability to claim business entertainment expenses. Our CPA has assured us that taking a supporting pastor to lunch and hosting missions teams are expenses that can still be listed on your MFR. One key factor is recording the business purpose of the meal, as well as the participants. (i.e. Took Pastor and Mrs. Smith to lunch to discuss ministry philosophy, or took the Taylors to coffee for a counseling session.) This change specifically affects entertainment expenses such as tickets to sports games or concerts, or sightseeing excursions, so will likely have little impact on our missionaries.
- Change in Moving Expenses
One big change is that moving expenses are no longer tax deductible. Therefore, shipping a container of household goods is no longer able to be listed on your MFR. If that container also has ministry items, it is possible there may be some allowances that can be made for a portion of the overall expense. Our CPA is unsure how the impact of this change will play out, as the IRS begins making decisions on case-by-case situations of what may still be allowable vs. what will definitely not be allowed. Passports and visa costs will still be allowed, as they are not specifically related to moving. For now, please be aware of this as you estimate costs for moving to the field. As many costs will no longer be tax deductible, you may wish to increase your estimated tax payments to help make up the difference. Please communicate with us when the time comes to move, so we can consult our CPA about your individual case.
- Change in Child Tax Credits
These changes will affect each family differently, and it is vital that your tax preparer is aware of both state and federal laws that affect this complex situation. Following is a brief note from our CPA: “We are balancing state and federal laws regarding the foreign earned income exclusion (FEIE), foreign tax credits, and child tax credits. In some cases, we delay using the FEIE for federal purposes (but not for state, if applicable), in order to gain benefits of child tax credits. With the increased credits, especially the refundable portion, it’s potentially a whole new ballgame. As our missionary clients get older and their children begin to turn age 17 or begin to attend accredited colleges (depending on the five-year window for FEIE elections), we annually must revisit these factors.”
We recommend discussing your situation with your tax preparer annually, and asking that they recommend which method of exclusions vs. tax credits will most benefit you not only in the current year but also for the future. Our CPA is also available to discuss this should you or your preparer have questions.
- Tax Notes
As you prepare to submit your financial documents to your tax preparer, here are some things you may want to give them:
- List of dates you were in the US vs. out of the country
- Details of any housing expenses
- Information on any retirement plans – IRA, Roth IRA, Traditional IRA, or 403(b)
- Information on any investments
- Information about any foreign bank accounts on which you are a signatory
- Details of any family births or deaths in 2018 (Names, dates, and SSNs)
- Details of estimated taxes submitted
- Information about your health coverage and medical expenses, including the type of health coverage you have (i.e. traditional insurance, marketplace insurance, health sharing plan, etc.)
- W-2s, 1099’s, and other tax forms received
- Details of charitable contributions
- Be sure your tax preparer is aware that you are a dual-status minister, who is self-employed but receives a W-2.
- New for this year: You may need to provide copies of a photo I.D. such as a drivers license or passport if your preparer will be submitting your taxes electronically