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Supporting Your Faith with Fiscal Accountability

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I have been the treasurer for my church for the better part of 10 years. It is an important job but one that requires a certain amount of specialized knowledge to do it properly which makes it very difficult to ever move out of the position. Having a firm like OSA&C to step in and do the detailed work allows our church finance committee to focus on making the decisions that are best for the church and not be concerned with the details of the books. What a relief!

William S. Hart, CFP, MBA
Retirement Strategies, Inc.

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Call: 904-398-4747

Be sure to document your personal expenses well. . .

As an employee of a nonprofit or faith-based organization you give a lot. You likely earn less than you would in the for-profit world and you probably never ask for reimbursement for many of the expenses you incur on behalf of your organization. But a number of these expenses may be deductible on your personal tax return, so be sure to document them well.

Here are few fundamentals:

  • Cell phones no longer need a contemporaneous log, but you should still be able to support the need for a cell phone account at your level of service for business purposes. If your contract provides 1,000 text messages but someone in your family uses them all for recreation, you can’t justify that as a business deduction.
  • Meals and entertainment require documentation: who, when, why, where and how much of each item. You can note these items on the receipt or on another contemporaneous ledger you keep. Meals and lodging while travelling can rely on the per diem rates the federal employees use (unless you’re self-employed), but must prove you visited the locations those rates apply to. Meals purchased as part of occasional employee meetings, training or seasonal parties are fully deductible. Meals related to promotional activities are better accounted for under marketing expenses, and those included in the registration for a conference or business meeting don’t need to be separated from the overall cost. This rule allows those amounts to be fully deductible without the 50% reduction normally required.
  • Automobile use is another popular topic for questions. Simply stated, document the business use of the vehicle. You can’t document the personal portion and assume the balance is business. Commuting mileage (to and from work) isn’t allowed, but if you use your vehicle for business the miles from your first business stop to your last business stop each day are; so plan your day to maximize the business travel! You must maintain written evidence to support those miles, such as a ledger, log, calendar, or expense report. Choose to deduct the standard mileage rate of 55.5 cents per mile or actual expenses; you can’t take both! If you use actual expenses, we need both the business miles and total miles for the year to determine the business use percentage. Once you select a method of accounting for a vehicle, you’re stuck with it for that vehicle. If you lease a car, the full lease payment is included in the expenses, but income add-back amounts exist on a lease based on the value of the car when the lease commences.  If the IRS changes the mileage rates part-way through the year, your records must show your mileage for each part of the year. Additionally, interest, tolls and parking can be added based on business use.

Some expense items will receive more scrutiny than others, as they’re more easily “estimated” than others. Most of these areas include provisions for standard amounts for simplicity, but even using those standards require proper accounting. If you need guidance or have concerns on the matter, you can always contact Online Stewardship at 904-399-4747 or email Lynn@onlinestewardship.com.

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