In this 90 minutes webinar Quickbooks experts Barbara Starley, CPA, and Gregg S. Bossen, CPA shared answers to questions concerning pastors payroll, housing allowance, employees, independent contractors and more.

1. QuickBooks®
for Houses of Worship:
Understanding Pastor Payroll
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@GreggBossen
@BarbaraStarley
WELCOME!!! WE WILL START AT 2:02PM ET (11:02AM PT)
YOU SHOULD BE HEARING MUSIC!!!
Presenters:
Barbara L. Starley, CPA
Gregg S. Bossen, CPA

2. QuickBooks Made Easy for Houses of Worship Webinar
About Our Instructors
Gregg S. Bossen, CPA
➢ Certified Advanced QuickBooks ProAdvisor®
➢ Specializes in Industry Specific Training
➢ Author of QuickBooks® Made Easy™ for Nonprofits
➢ National Trainer – seminars around the country
QuickBooks Made Easy™
for Nonprofits
Atlanta, GA
www.quickbooksmadeeasy.com
Barbara L. Starley, CPA
➢ QuickBooks ProAdvisor®
➢ 3x Amazon Best-Selling Author
➢ Your Amazing Itty Bitty QuickBooks books
➢ Owner - On-Call Controller
➢ Founder - Good Steward Church Academy®
➢ Barbara@BarbaraStarley.com
@2021 Barbara L Starley, CPA

3. QuickBooks Made Easy for Houses of Worship Webinar
TO MAKE SCREEN BIGGER IN ZOOM
• MOVE YOUR MOUSE
AROUND
• LOOK FOR “VIEW”
ICON ON TOP RIGHT
• SELECT “FULL
SCREEN”

4. QuickBooks Made Easy for Houses of Worship Webinar
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5. QuickBooks Made Easy for Houses of Worship Webinar
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6. QuickBooks Made Easy for Houses of Worship Webinar
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Upcoming Webinar Series
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7. QuickBooks Made Easy for Houses of Worship Webinar
Special Offer!
Ends 9/3/2022 at 11:59PM PST
• QuickBooks for Houses of Worship $269
The material covers both basic and advanced topics of using
QuickBooks for houses of worship and churches.
Normally: $299
Code: TS30OFF
➢ Tech Support for 1 Year $299
Normally: $499.00
Code: TSTS299

8. QuickBooks Made Easy for Houses of Worship Webinar
Pastor Payroll – Agenda
 Classification of Workers in Houses of Worship
 Who can be a Pastor?
 What does “dual status” mean?
 Housing Allowances
 Reporting Pastor Compensation
 Options for Pastors to Pay Taxes
 Opting-out of SE Taxes
@2022 Barbara L Starley, CPA

9. QuickBooks Made Easy for Houses of Worship Webinar
Pastor Payroll – Agenda
 Classification of Workers in Houses of Worship
@2022 Barbara L Starley, CPA

10. QuickBooks Made Easy for Houses of Worship Webinar
Classification of Workers
Employee
 Employed by HOW*
 Employment Agreement
 HOW controls schedule
 HOW trains/supervises
 HOW provides space,
equipment & tools
 HOW reimburses for
expenses
 HOW determines pay
rates & pay schedule
 HOW provides benefits,
including Work Comp
Independent Contractor
 Self-employed in a Trade/Business
 Contractual Agreement
 IC* controls schedule
 IC works without supervision
 IC uses his/her own equipment &
tools
 IC pays own expense - potential for
profit and risk of loss
 IC controls billing rate and bills HOW
for work performed
 IC responsible for work comp &
liability coverage
@2022 Barbara L Starley, CPA
*HOW = House of Worship *IC = Independent Contractor

11. QuickBooks Made Easy for Houses of Worship Webinar
3 Key Determination Factors
@2022 Barbara L Starley, CPA
CONTROL
FINANCIAL
TIME &
SUPERVISION
PERCEIVED
RELATIONSHIP

12. QuickBooks Made Easy for Houses of Worship Webinar
Reporting Compensation
Employees
Non-Employees
Independent Contractors
https://www.irs.gov/pub/irs-pdf/f1099nec.pdf
https://www.irs.gov/pub/irs-pdf/fw2.pdf
@2022 Barbara L Starley, CPA

13. QuickBooks Made Easy for Houses of Worship Webinar
Pastor Payroll – Agenda
 Classification of Workers in Houses of Worship
 Who can be a Pastor?
@2022 Barbara L Starley, CPA

14. QuickBooks Made Easy for Houses of Worship Webinar
Who
can be a
Pastor?
 Licensed, commissioned,
or ordained minister
 Common law employee
of a religious body
 Employed to provide
ministerial services
 Ministration of sacerdotal functions
 Conduct of religious worship
 Control, conduct, and maintenance
of organizations
https://www.irs.gov/pub/irs-utl/ministers.pdf
@2022 Barbara L Starley, CPA

15. QuickBooks Made Easy for Houses of Worship Webinar
Pastor Payroll – Agenda
 Classification of Workers in Houses of Worship
 Who can be a Pastor?
 What does “dual status” mean?
@2022 Barbara L Starley, CPA

16. QuickBooks Made Easy for Houses of Worship Webinar
What is “dual status”?
 Status of EMPLOYEE
for federal & state income
tax purposes
 Status of SELF-EMPLOYED
for Social Security &
Medicare purposes
@2022 Barbara L Starley, CPA

17. QuickBooks Made Easy for Houses of Worship Webinar
Which form should
a Pastor receive?
@2022 Barbara L Starley, CPA

18. QuickBooks Made Easy for Houses of Worship Webinar
Pastor Payroll – Agenda
 Classification of Workers in Houses of Worship
 Who can be a Pastor?
 What does “dual status” mean?
 Housing Allowances
@2022 Barbara L Starley, CPA

19. QuickBooks Made Easy for Houses of Worship Webinar
Pastor Compensation
Housing
Benefits
Salary
Excluded from federal
(and most state)
income tax;
but is subject to SE tax
MAY be taxable for both
income tax and SE tax
Included in income
for income tax
and SE tax
@2022 Barbara L Starley, CPA

20. Four Types of Taxes
Federal
Income Tax
State
Income Tax
Social
Security Tax
Medicare
Tax
FICA SE Tax

21. QuickBooks Made Easy for Houses of Worship Webinar
Housing Allowances
A minister's housing allowance
(sometimes called a parsonage allowance or a rental allowance)
is excludable from gross income
for income tax purposes
but NOT excludable
for self-employment tax purposes.
https://www.irs.gov/faqs/interest-dividends-other-types-of-income/ministers-compensation-housing-allowance/ministers-compensation-housing-allowance
@2022 Barbara L Starley, CPA

22. QuickBooks Made Easy for Houses of Worship Webinar
The Lesser of Three
Board
Designated
Fair
Rental
Value
Actual
Expenses
Mortgage
Principal &
Interest
RE Taxes
Home/Renter
Insurance
HOA Fees
Utilities
Repairs
Yard
Maintenance
Furniture
Appliances
Down Pmt in
Yr of
Purchase
Furnished
Utilities
Dollar
Amount
or
Percentage of
Income
@2022 Barbara L Starley, CPA

23. QuickBooks Made Easy for Houses of Worship Webinar
Worksheet
@2022 Barbara L Starley, CPA

24. QuickBooks Made Easy for Houses of Worship Webinar
REMINDERS
 Housing Allowances must be:
 Formally designated and
recorded in advance
 May not be established or
changed retroactively
@2021 Barbara L Starley, CPA

25. QuickBooks Made Easy for Houses of Worship Webinar
Exception to Housing Exclusion
If your housing allowance
exceeds the lesser of 3
your reasonable compensation,
the fair rental value of the home,
or your actual expenses directly relating to
providing the home,
you must include the
amount of the excess in income.
https://www.irs.gov/taxtopics/tc417
Note: It is ultimately the Pastor’s responsibility to
determine and REPORT any excess housing allowance.
@2022 Barbara L Starley, CPA

26. QuickBooks Made Easy for Houses of Worship Webinar
Pastor Payroll – Agenda
 Classification of Workers in Houses of Worship
 Who can be a Pastor?
 What does “dual status” mean?
 Housing Allowances
 Reporting Pastor Compensation
@2022 Barbara L Starley, CPA

27. QuickBooks Made Easy for Houses of Worship Webinar
Pastor’s W2
Boxes 3, 4, 5 & 6 = Blank (or $0)
for pastors
Box 14 = Housing Allowance
Box 16 = Generally the same as Box
1, unless housing allowance is taxable
for state income taxes
@2021 Barbara L Starley, CPA
Box 1 = Total Compensation,
NOT including housing allowance

28. QuickBooks Made Easy for Houses of Worship Webinar
What is included in Box 1 income?
Salary &
Bonuses
Cash &
Gift Cards
Reimbursed
FICA/Ins
Non-Accountable
Allowances
Honorariums
Pastor Appreciation
Love Offerings
Des
Fund
@2022 Barbara L. Starley, CPA

29. QuickBooks Made Easy for Houses of Worship Webinar
“Fund Buckets™”
@2022 Barbara L Starley, CPA

30. QuickBooks Made Easy for Houses of Worship Webinar
Does Your House of Worship collect
designated/restricted funds?
@2022 Barbara L Starley, CPA

31. QuickBooks Made Easy for Houses of Worship Webinar
Pastor Payroll – Agenda
 Classification of Workers in Houses of Worship
 Who can be a Pastor?
 What does “dual status” mean?
 Housing Allowances
 Reporting Pastor Compensation
 Options for Pastors to Pay Taxes
@2022 Barbara L Starley, CPA

32. @2022 Barbara L. Starley, CPA
SE Taxes
QuickBooks Made Easy for Houses of Worship Webinar

33. Jan 15
QuickBooks Made Easy for Houses of Worship Webinar
Option #1 for Paying Taxes
@2022 Barbara L Starley, CPA
April 15
June 15
Sept 15

34. QuickBooks Made Easy for Houses of Worship Webinar
Option #2 for Paying Taxes
States have a similar form that
will allow Pastors to withhold
state taxes as well.
@2022 Barbara L Starley, CPA

35. Typical QB Desktop Setup
UNCHECK:
Medicare
Social Security
Federal Unemployment
QuickBooks Made Easy for Houses of Worship Webinar

36. Typical QB Online Setup

37. QuickBooks Made Easy for Houses of Worship Webinar
Pastor Payroll – Agenda
 Classification of Workers in Houses of Worship
 Who can be a Pastor?
 What does “dual status” mean?
 Housing Allowances
 Reporting Pastor Compensation
 Options for Pastors to Pay Taxes
 Opting-out of SE Taxes
@2022 Barbara L Starley, CPA

38. QuickBooks Made Easy for Houses of Worship Webinar
Opting-out of SE Taxes
This form creates an IRREVOCABLE election between the Pastor & the IRS.
Covers church compensation only.
Conscientiously opposed
to the acceptance of:
 Social Security (OASDI)
 Medicare/Medicaid
 TANF/Temporary Assistance
for Needy Families
 SNAP/Food Stamps
 WIC/Women, Infants
& Child Welfare
@2022 Barbara L Starley, CPA
Form 4361

39. Five Steps
for
Opting Out
of
Social
Security
@2022 Barbara L Starley, CPA
Receive Receive Approval from IRS
Verify Verify Grounds for Exemption
Inform Inform your Church*
File File IRS Form 4361 (must be timely)
Qualify Conscientious Opposition
QuickBooks Made Easy for Houses of Worship Webinar

40. QuickBooks Made Easy for Houses of Worship Webinar
Under Penalties of Perjury
A pastor can only opt out if he
can truthfully state:
“I am consciously opposed to,
or because of my religious principles
I am opposed to,
the acceptance of any public insurance
that makes payments in the event of death, disability, old age,
or retirement;
or that makes payments towards the cost of, or provides
services for, medical care.”
Form 4361
@2022 Barbara L Starley, CPA https://pcarbi.org/pastors-social-security/

41. Top
3
Take-Aways
Can not be for
economic reasons.
Irrevocable.
• Retirement Savings
• Life Insurance
• Disability Insurance
• Health Savings Account
• Long-Term Care Insurance
Make up for benefits
on your own.
©2022 Barbara L Starley, CPA
https://www.ramseysolutions.com/retirement/retirement-calculator
Claiming
an
Exemption
from
SE Tax
Form 4361

42. @2022 Barbara L. Starley, CPA
SE Taxes
QuickBooks Made Easy for Houses of Worship Webinar

43. QuickBooks Made Easy for Houses of Worship Webinar
Useful Resources
Ministers Audit Techniques Guide
https://www.irs.gov/pub/irs-utl/ministers.pdf
Publication 517
https://www.irs.gov/pub/irs-pdf/p517.pdf
@2022 Barbara L Starley, CPA

44. QuickBooks Made Easy for Nonprofits
More Webinars to be Announced!!
Upcoming Webinar Series
QuickBooks for Houses of Worship
2 Day Webinar Series
$169 with $30 off coupon code: TS30OFF (reg. $199)
FOR QUICKBOOKS DESKTOP USERS
Wed, Sept 14 - Thurs, Sept 15
2:00 – 4:00pm EST
https://bit.ly/3AmlQ8a
FOR QUICKBOOKS ONLINE USERS
Wed, Sept 21 – Thurs, Sept 22
2:00 – 4:00pm EST
https://bit.ly/3CtMte3

45. QuickBooks Made Easy for Nonprofits
Special Offer!
Ends 9/3/2022 at 11:59PM PST
• QuickBooks for Houses of Worship $269
The material covers both basic and advanced topics of using
QuickBooks for houses of worship and churches.
Normally: $299
Code: TS30OFF
➢ Tech Support for 1 Year $299
Normally: $499.00
Code: TSTS299

46. QuickBooks Made Easy for Nonprofits
THANK YOU!!!!
Presenters:
Gregg S. Bossen, CPA
Barbara L. Starley, CPA
Get Social Use Hashtag #QBME
Twitter: @QBMadeEasy
@GreggBossen
@BarbaraStarley
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