End Strong to Start Strong In 7 Steps
By Analiese Rivera
These actions will ensure your ministry is compliant, organized, and ready to pursue God’s calling in the new year.
1. Hold Your Annual Board Meeting
State law requires churches to hold at least one annual board meeting, with detailed minutes recorded and stored in your corporate records. This meeting is a chance to review critical decisions, such as budgets, salaries, housing allowances, and ministry policies. Comprehensive minutes, often spanning 20+ pages, demonstrate your commitment to compliance.
If you’ve already met the minimum requirement, consider holding a year-end review board meeting to review your minutes and summarize your progress.
2. Set Up Housing Allowances Properly
A properly designated housing allowance can maximize tax benefits for your pastors and ministers, whether salaried or not. However, improper designations can lead to costly penalties during an audit. Review and approve housing allowances for 2026 at your December board meeting to ensure compliance and protect your team. Need guidance? Our team is here to help. Call 770-638-3444.
3. Gather Essential Tax Forms
Be proactive by ensuring your ministry has all necessary tax forms on hand for 2026. These include W-4, W-9, 1099-MISC, 1096, W-2, W-3, 941 Quarterly, and 8282. Having these forms ready now will streamline your reporting process in January and February, saving time and reducing stress.
4. Report All Gifts to Pastors
Gifts to pastors, such as love offerings, gift cards, or cash, must be reported on W-2 and W-3 forms submitted to the Social Security Administration. Even small amounts count. Failing to report these can lead to compliance issues. Use our Giving Halo software to accurately track and report these gifts, ensuring your ministry stays above board.
5. Prepare Contribution Statements
Donations of $250 or more require a specific acknowledgment stating the amount given and whether the donor received goods or services in return (typically noting “no goods or services were received except for intangible religious benefits”). Remind your congregation to wait for their contribution statements before filing taxes, as this ensures their donations are tax-deductible. Our Giving Halo software simplifies this process, keeping your records compliant and organized.
6. Compile a Vendor List and Issue 1099s
Create a comprehensive list of all vendors who provided services to your ministry in 2025, such as guest speakers, musicians, contractors, or childcare workers. Have each vendor complete a W-9 form, and securely store this information in your accounting system or our W-2 and 1099-MISC Kit. Any vendor paid $600 or more should issue a 1099-MISC form to maintain IRS compliance.
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7. Explore Self-Employment Tax Exemption for Ministers
Ordained ministers may be eligible to apply for a self-employment tax exemption under Internal Revenue Code section 1402, without losing retirement benefits. This lesser-known option can save significant tax dollars, but the window to apply is limited, typically within two years of ordination. December is the perfect time to evaluate this opportunity before the 2026 tax deadline. Contact us at 770-638-3444 for assistance!
Invest in Tax Knowledge
Understanding church tax requirements is critical to avoiding overpayment or penalties. While taxes can feel complex, taking time to learn the basics empowers you to steward your ministry’s resources wisely. Commit to growing your knowledge in 2026, and our team can provide resources and guidance to make compliance simple and stress-free.
Finish 2025 with Purpose
Pastors and leaders, God has called you to steward His work with excellence. By ending 2025 strong, you’re laying a foundation for a fruitful 2026. Let us partner with you to ensure your ministry is compliant and ready to thrive. Call us at 770-638-3444 or schedule a consultation with a specialist today!
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