IRS Changes Mileage Rate 

In an unusual, but expected, move, the Internal Revenue Service recently announced that they are raising the allowed reimbursement rate used for calculating business miles in private vehicles. Effective July 1, 2022, the new mileage rate will be 62.5 cents a mile, up from 58.5 cents a mile. 

The IRS also announced that the moving costs and medical expenses rate would increase from 18 cents a mile to 22 cents a mile.

The changes are a reflection of higher fuel costs and the current inflationary impact on automobile travel. Although it has occurred a few times, it is highly unusual for the IRS to make such a mid-year change.  

“With gasoline prices now well over $5.00 per gallon on average nationwide, the IRS recognized that employees were in desperate need of relief. This increase to 62.5 cents per mile will hopefully make up some of the difference of the increased costs of a pastor or church employee using their vehicle for church business purposes,” stated Art Rhodes, President and CEO of the Church of God Benefits Board, Inc. While recognizing that not all churches can pay the higher mileage amount, Rhodes went on to encourage churches to make this change, if possible, beginning July 1. Church budgets may need to be modified to cover these, and a host of other, increased costs.

Additional information about business expense reimbursement can be found in the Church Treasurer’s Manual and the Minister’s Compensation Manual, both available without cost at www.benefitsboard.com

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Public Service Loan Forgiveness (PSLF) for Ministers and Church Employees

New legislation passed in July 2021 extended the Public Service Loan Forgiveness to the student loans of ministers and other employees of non-profit, faith-based entities, including churches.  Therefore, under the Public Service Loan Forgiveness (PSLF) Program, ministers and church employees are afforded the opportunity to qualify for student loan forgiveness after reaching certain qualification levels, generally after making payments for 10 years. 

The Church of God Benefits Board, in partnership with the Church Benefits Association and Church Pension Group, hosted a webinar last month highlighting the qualifications of the PSLF program and how ministers and church employees can apply for student loan forgiveness under the program.  For those who were unable to attend, or for anyone who would like to watch the presentation again, a recording of the webinar is now available via our website.  To access, click on the Resource tab, then Public Service Loan Forgiveness.  Additional information, including the PowerPoint presentation and a resource list on the PSLF program, are available on our site. 

Should you have any questions regarding the PSLF Program, you can visit the government’s website directly at https://studentaid.gov/manage-loans/forgiveness-cancellation/public-service.

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IRS Announces 2022 Standard Mileage Rate 

The Internal Revenue Service recently issued the revised standard mileage rate which is used to calculate the deductible costs of operating an automobile for business purposes during 2022. 

Beginning January 1, 2022, the standard mileage rate for the use of a car for business purposes will be 58.5 cents per mile for business miles driven – an increase of 2.5 cents per mile over the 2021 rate. The standard mileage rate is based on an annual study of the fixed and variable costs of operating an automobile.

Churches that follow an accountable reimbursement plan should use the new rate to budget expenses for 2022.

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Board Manuals Updated for 2022 

With each New Year comes new rules, new regulations, and new contribution limits. Therefore, all of the Benefits Board’s free educational manuals have been updated to take into consideration all relevant changes for 2022. You can access the latest version of each manual from the Benefits Board website. The topics covered are:

  • Church Construction and Financing Manual
  • Ministers’ Retirement Plan Document Summary
  • Church Treasurer’s Manual
  • Minister’s Compensation Manual
  • Church Budgeting Manual
  • Tax Information Manual
  • The Church as a Taxpayer Manual
  • Church Loan Fund Policy Manual
  • Church and Nonprofit Tax and Financial Guide (ECFA)
  • Minister’s Tax and Financial Guide (ECFA)

All manuals are available without cost and may be used by the local church and church officials to address the everyday issues faced by most churches. Please forward any questions or comments about the manuals to info@benefitsboard.com.

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Board Grants Year-End “Bonus” to Participants

In the recent meeting of the Board of Directors of the Church of God Benefits Board, the entity charged with managing the Ministers’ Retirement Plan, action was taken to grant a special year-end interest allocation to all participants in the Trustees’ Fund. The Board has taken similar action in 2017 and in 2019.
 
Because earnings in the Trustees’ Fund were better than anticipated in 2021, this one-time allocation of interest was approved by the board to be distributed in late December. Each participant with an investment in the Trustees’ Fund will receive a special interest allocation on a pro-rata basis. The allocation is expected to amount to over 2.27% of the participant’s investment in the Trustees’ Fund. For example, a participant with $1,000 in the Trustees’ Fund will have approximately $22.72 in interest added to their account while a person with $100,000 in the Trustees’ Fund will receive approximately $2,272. The pro-rata amount that each person receives will be based solely on the amount that person has invested in the Trustees’ Fund – and will not take into consideration the balances in the equity investments.
 
With the additional interest of 2.27%, the effective rate for the Trustees’ Fund in 2021 will exceed 6.27%.  
 
In making this announcement of the special year-end interest allocation, Board Chairman Mark Walker also announced that the return on the Trustees’ Fund for 2022 will continue to be at four (4%) percent. In a time when fixed return rates remain at a historical low, the Board determined that it was extremely fortunate that the Ministers’ Retirement Plan can continue to pay at a rate that greatly exceeds the market rate. While the Board has projected the rate for the Trustees’ Fund to remain at four percent in 2022, it is possible that the rate could change based upon market conditions.
 
Since the retirement plan is a non-profit entity, all earnings, outside of an allowable reserve, must be passed on to participants. With earnings greater than expected in 2021, the one-time allocation announced today (Dec. 27, 2021) became the fastest and most economical way to make those additional earnings available to participants.
 
Chairman Walker also announced that the board is still offering an incentive bonus for new participants who join the plan. For any new participant, the plan will match dollar-for-dollar the contributions made in the first calendar year the participant is in the retirement plan, up to $500 per participant.
 
Participants are reminded that they may invest in three other options besides the Trustees’ Fund. The other options are all based upon stock funds and fluctuate with the stock market. Your ability to withstand volatility should be taken into consideration before making any investment selection. Further, you should always remember that past performance is not a guarantee of future performance. To learn more about the Ministers’ Retirement Plan, please visit our website at www.benefitsboard.com.

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Final Instructions

If you passed away today, would your family know how to access all your important accounts, files, insurance policies, and even social media accounts?

The current pandemic has contributed to hundreds of thousands of deaths of people who would have most likely lived much longer lives. Many of those unexpected deaths have left surviving family members struggling to put all the pieces together afterwards, not knowing financial details or the last wishes of the deceased person.

It has been said that people are dying every day who have never died before!! While that comment is made jokingly, many people have died over the last year without having adequate time to plan for their deaths, leaving family members with no idea about their wishes or desires concerning funeral arrangements or financial affairs. To help families be more prepared, we have developed a document, entitled “A Letter of Final Instructions to my Family,” that can be used by anyone to offer guidance to their loved ones after the person’s death or incapacity. The document allows the person to provide funeral/burial wishes, bank and savings account information, retirement and investment account information, real and personal property details, password information for social media accounts, as well as a host of additional information.

The eleven-page “letter” can be printed out and filled in, or it can be filled in directly by typing into the document on your computer. While this “Letter of Final Instructions” is critically important, it does not take the place of other legal documents that every person should have in place. Those legal documents, among possibly others, include:

  • Last Will and Testament
  • Durable Power of Attorney, and
  • Living Will / Healthcare Directive

Every person, regardless of age, should have all three of these documents completed and in a safe place. Further, at least every three years, you should review these legal documents and make sure that they still clearly carry out your current wishes. If not, they should be updated by your personal attorney. Because of the complexities of state laws, if you move from one state to another, your legal documents should be reviewed to make sure that they are still applicable.

However, in addition to these documents that you will need legal assistance to draft, you should fill out the “Letter of Final Instructions” that you can access on our website. As you will see, this letter provides details on information and accounts that are generally not addressed in the legal documents. Nevertheless, the information that you include in the “letter” will certainly make for a better transition for your family if something unexpected happens to you or if you become incapacitated.

While our hope is that you will live a long and fruitful life, you need to be prepared if God has different plans for you. Having the updated legal documents mentioned above, along with an updated “Letter of Final Instructions” to your family, will certainly make your transition from this life to Glory much easier on those you leave behind. So, take a few minutes and complete the “letter” – and then make sure that your next of kin knows where you filed the document so they can access it if something happens to you. It is the least that you can do for your family.

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COVID-19 Funeral Assistance Available Through FEMA

As a part of the recent stimulus legislation passed by Congress, the Federal Emergency Management Agency (FEMA) is making available emergency funeral assistance for those who died from COVID-19. Up to $9,000 per death may be provided if the applicant meets the eligibility rules.

To be eligible for funeral assistance, you must meet these conditions:

  • The death must have occurred in the United States, including the U.S. territories, and the District of Columbia.
  • The death certificate must indicate the death was caused by, “may have been caused by,” or “was likely a result of” COVID-19 or COVID-19-like symptoms.
  • The applicant must be a U.S. citizen, non-citizen national, or qualified alien who incurred funeral expenses after January 20, 2020.
  • There is no requirement for the deceased person to have been a U.S. citizen, non-citizen national, or qualified alien.

Currently, there is no online application for such assistance. To apply, you must call FEMA’s COVID-19 Funeral Assistance hotline at (844) 684-6333 between the hours of 9:00 am and 9:00 pm ET, Monday through Friday. Only the next of kin or a family member who paid for funeral expenses can submit an application for assistance. A funeral home cannot submit applications.

When you place the call to the FEMA Funeral Assistance hotline, you will need an official death certificate for the person that attributes the death directly or indirectly to COVID-19, as well as receipts and contracts to document the funeral expenses. Once you have an application number, the supporting documents will need to be provided to FEMA. It should be noted that if burial or funeral insurance was used, or if the person had pre-paid for their funeral prior to the pandemic, those expenses may not be duplicated and only expenses that were not covered by such policies will be subject to reimbursement.

Most general funeral expenses are covered under this reimbursement program, including a casket or urn, burial plot, and headstone, as well as funeral home costs. While the maximum per funeral reimbursement is $9,000, a person may apply for up to $35,500 per application if others within the family died of COVID-19 as well.

Applications can be submitted for funeral expenses that occurred after January 20, 2020. FEMA has not currently set an application deadline for seeking assistance under this program.When calling the FEMA funeral assistance toll-free number – (844) 684-6333, the next of kin should be prepared to spend at least 20 minutes on the phone answering pertinent questions concerning the application. Due to the high volume of calls anticipated, you should also expect a busy signal as the FEMA staff works through the application process. To obtain such assistance, you will have to be persistent in your efforts to reach FEMA.

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W-2/1099-NEC Tips

A W-2 form must be issued to any employee (including ministers) who received compensation from the local church during the previous tax year. In addition, 1099-NECs (a new form) must be issued to all independent contractors who received more than $600 from the church in the year.  In completing the forms, here are a few tips to remember:

  • The W-2 forms must be completed and issued to each employee by no later than January 31. The employer/church must then make sure that they submit to the Social Security Administration “Copy A” of each W-2 form and the W-3 transmittal form by the same date – January 31. (NOTE the new date for filing W-3s.)
  • Form 1099-NEC and Form 1099-Misc. must be provided to independent contractor by January 31, and the forms must be filed with the Internal Revenue Service using the Form 1096.
  • You can obtain blank tax forms from your local IRS office, your local post office, or by calling the IRS toll-free forms number (1-800-TAX-FORM).
  • All dollar entries should be made without dollar signs and commas, but with a decimal point and cents. For example, $1,000 should read as “1000.00.” If you put down 1000, the IRS scanning equipment will read that as $10.00 – so make sure that decimals and cents are used.
  • If a box does not apply, leave it blank. Do not insert “0” or “N/A.”
  • Make sure that you use the correct employer identification number (EIN) for the church/employer. This is critical especially if you have more than one entity (such as a church school) operating under a similar name.
  • In identifying employees on the W-2 (Box e), do not include titles, such as Rev., Mr. or Dr. Also, do not include suffixes such as Jr. or Sr.
  • Make sure that the ministerial housing allowance or the fair rental value of the parsonage is not included in Box 1 wages on the W-2. However, do include insurance assistance payments provided to pay individual healthcare policies. Note that the fair rental value of a parsonage or ministerial housing allowance should be reported in Box 14 on the W-2.
  • Pastors should receive a W-2. If they receive a 1099-NEC, they are not entitled to employee benefits, such as housing allowance, expense accounts, and retirement contributions from the church.
  • Check the retirement box in Box 13 only if the minister or church-related employee participates in a recognized retirement plan, such as the MRP.
  • Retirement plan contributions made by the church on behalf of the minister or a church-related employee are not required to be reported at all on Form W-2. However, any amount contributed by salary reduction agreement should be reported in Box 12 of the W-2 form, using the code “E”.
  • Make sure the ink on the forms is not too faint, and that the writing is legible and not too small.
  • If you need additional assistance in completing the forms, review the examples contained in the Treasurer’s Manual or Ministers’ Compensation Manual available on the Benefits Board’s website or for specific information, you may call the IRS directly at 1-866-455-7438 for assistance.
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Board Manuals Updated for 2021

With each New Year comes new rules, new regulations and new contribution limits. Therefore, all of the Benefits Board’s free educational manuals have been updated to take into consideration all relevant changes for 2021. You can access the latest version of each manual from the Benefits Board website. The topics covered are:

Church Construction and Financing Manual
Ministers’ Retirement Plan Document Summary
Church Treasurer’s Manual
Minister’s Compensation Manual
Church Budgeting Manual
Tax Information Manual
The Church as a Taxpayer Manual
Church Loan Fund Policy Manual
Church Reporting Made Easy Manual (ECFA)
Ministers’ Taxes Made Easy Manual (ECFA)

All manuals are available without cost and may be used by the local church and church officials to address the everyday issues most churches face. Please forward any questions or comments about the manuals to info@benefitsboard.com.

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IRS Announces 2021 Standard Mileage Rate

The Internal Revenue Service recently issued the revised standard mileage rate which is used to calculate the deductible costs of operating an automobile for business purposes during 2021.

Beginning January 1, 2021, the standard mileage rate for the use of a car for business purposes will be 56.0 cents per mile for business miles driven – a slight decrease from the 2020 rate. The standard mileage rate is based on an annual study of the fixed and variable costs of operating an automobile.

Churches that follow an accountable reimbursement plan should use the new rate to budget expenses for 2021.

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