941 problem

[athomas]

The problem has been traced back to the first quarter of 2017 when someone else was going this job, I have read many of the posts about power church and 941 and have gone through to ensure the maintain employees and maintain descriptions are set up properly. To start with the wages reported on 941 line 5a for ss is only $610 less than line 2. I know this is not accurate because the pastor's wages which should be included in line 2 (the correct amount shows on w2 for 2017) are much higher than so line 5 should be several thousand dollars lower. The pastor's salary item description only has federal checked under other options and the housing only is used. I'm going back through the entire year trying to determine other errors but running out of time. The same issue occurs with each quarter. Will probably request an extension as have been ill but still need to find out problem. Can someone lead the way, getting desperate. Is there a reliable company to share data with that may can help. We have a CPA but he doesn't know power church.

[NeilZ]

The problem has been traced back to the first quarter of 2017 when someone else was going this job, I have read many of the posts about power church and 941 and have gone through to ensure the maintain employees and maintain descriptions are set up properly. To start with the wages reported on 941 line 5a for ss is only $610 less than line 2. I know this is not accurate because the pastor's wages which should be included in line 2 (the correct amount shows on w2 for 2017) are much higher than so line 5 should be several thousand dollars lower. The pastor's salary item description only has federal checked under other options and the housing only is used. I'm going back through the entire year trying to determine other errors but running out of time. The same issue occurs with each quarter. Will probably request an extension as have been ill but still need to find out problem. Can someone lead the way, getting desperate. Is there a reliable company to share data with that may can help. We have a CPA but he doesn't know power church.

If you're sure its a problem with the way the Pastor's salary item is setup for Social Security and Medicare, make sure that the Pay Item for SS & Medicare deductions are not assigned to the pastor. That will eliminate one issue.

I would then run a Item Summary Report from the Payroll Reports for last year and include the option to Print Summary By Employee to see what is being taken out, and what the system shows as Total non-tax income.

[bsbrown]

Thank you Neil. The report shows that all housing allowance except the pastors is included in other income, The housing allowance payroll item setup for the pastor is more options with no check marks beside any of the deductions and a check beside housing allowance. Others same except SS and Medicaid is checked. so it appears pastors is correct; however, I thought housing for those who meet minister's definition had housing excluded from income but liable for ss and med so why is system counting others housing in income.

[NeilZ]

Thank you Neil. The report shows that all housing allowance except the pastors is included in other income, The housing allowance payroll item setup for the pastor is more options with no check marks beside any of the deductions and a check beside housing allowance. Others same except SS and Medicaid is checked. so it appears pastors is correct; however, I thought housing for those who meet minister's definition had housing excluded from income but liable for ss and med so why is system counting others housing in income.

Housing Allowance is not taxable for FITW, and is required to be shown in Box 14 of the W-2. It is taxable under the Self-Employment Contributions Act which is usually done when the minister if filing taxes.

Our minister gets a Social Security & Medicare offset, which is basically the part of the SS & Medicare taxes the employer would pay. This is taxable under FITW as well as SECA.

If your minister is in a state where Housing Allowance is not taxed, then you don't need to use the 'other tax options' on that income, just select the regular Housing Allowance checkbox, and let the drop down default to <more options>.

From what you're telling me is that you have some who qualify as ministers for housing allowance, but the system is setup to withhold SS & Medicare. If they also file SECA taxes, then they SHOULD NOT be having SS & Medicare withheld. If they would like to have an extra amount withheld as apart of the FITW to cover the SECA tax, that is added to the FITW Pay Item.

That is what we do here. The pastor's normal income has withholding done against it, we also withhold an additional amount based on what the normal SS & Medicare withholding for the employee and employer would be. Thus when it comes time for the pastor to file taxes, that additional withholding is available to cover the SECA taxes.

[athomas]

Comprehend all the info about self employment. Our other pastoral staff did not want to go that route. That is why SS and Medicaid is being taken from housing and properly shows up on w2. I know housing is not to be federal taxed but should it show up in line 2

[NeilZ]

Comprehend all the info about self employment. Our other pastoral staff did not want to go that route. That is why SS and Medicaid is being taken from housing and properly shows up on w2. I know housing is not to be federal taxed but should it show up in line 2

Housing SHOULD NOT be showing up in line 2 as income that is not taxable for FITW.

However it should be showing up as SS & Medicare taxable income on lines 5a & 5c, column 1.

Looking at the income Payroll Item Description I have setup for the pastor, I have the MORE OPTIONS selected from the drop down, and the HOUSING ALLOWANCE box checked. Because the allowance is taxable in PA, I also have MORE OPTIONS of PA State Income tax, and local Earned Income Tax checked.

In this situation, the housing allowance does not show up anywhere on the 941, as the pastor is self-employed.

As I also take care of accounting for my presbytery, we have one minister who gets housing allowance. This item description only has the HOUSING ALLOWANCE chosen from the drop down list. As it is not taxed in Ohio where he lives and works from.

In your case, the Item Description for those employees who want to have SS & Medicare taken out should have 'MORE OPTIONS selected from the drop down, and social security & medicare checked for tax deductions. The additional items that appear when the MORE OPTIONS is selected should have the Housing Allowance box checked. The PASTOR should only have the HOUSING ALLOWANCE selected from the drop down. The 'more options' are not needed here.