June 2014 Mission Institute

June 2014 __________
Presenter: Corey A. Pfaffe, CPA, PhD
June 2014 ____________
 Today—Financial “hot topics” update
 Tomorrow—Ministry topics from a “friendly”
Presenter: Corey A. Pfaffe, CPA, PhD
Financial “Hot Topics” Update
Tax Review and Update
• Foreign Earned Income Exclusion
• Housing allowance
• Ministry (“Business”) Expenses
– Ministry or Personal (Ordinary and Necessary)
– Missionary as earner versus family as earners
• Support issues
Housing Allowance: Review
• Principal residence
• Three-part test
– Actual expenses
– Designated amount
– Fair rental value, plus actual cost of utilities
• Partial reduction of deductible expenses
Housing Allowance: Unconstitutional?
Opting Out of Social Security
15.3% SECA; not 7.65% FICA
Does opting out include the ACA?
Retirement Plan Options: Review
• Internal Revenue Code Section 403(b) plans
• Traditional Individual Retirement Accounts
• Roth IRAs (and Roth 403(b) plans)
FBARs—Foreign Bank and Financial
Accounts Report
What? FinCEN Form 114, electronically
reporting foreign financial interests and
signature authority
Who? Any U.S. person with aggregate value
in foreign financial accounts exceeding
$10,000 at any time in 2013
When? June 30, 2014 (may not be extended)
Why? Consequence of failure to properly file
“not to exceed $10,000 …”
FBARs—Foreign Bank and Financial
Accounts Report
FBARs—Foreign Bank and Financial
Accounts Report
• Go to www.irs.gov and type “FBAR” in the
search window
• Engage a BSA E-Filer—a firm registered and
authorized under the Bank Secrecy Act to
file on behalf of others through the Financial
Crimes Enforcement Network
Affordable Care Act
• “Individual Shared Responsibility Payment”
– 2014: greater of 1% of your household income in excess of “filing
threshold” OR $285 (for family of six)
– By 2016: greater of 2.5% of your household income in excess of
“filing threshold” OR $695 per person ($4,170 for family of six)
• 100% exception for missionaries:
– If you qualify for the foreign earned income exclusion with a onceper-year presence in the U.S. of no more than three months
For more information...
IRS Publications
54 – U.S. Citizens Abroad
463 – Travel
535 – Business Expenses
1771 – Charitable Contributions
1828 – Churches & Religious Org.
Form 2555 – Foreign Earned Income Exclusion
Form 8938 – Report of Foreign Bank and Financial Accounts (FBAR)
Ministers Audit Techniques Guide
For more information...
Non-profit organization accounting principles
Compensation practices
Benevolent activities
Contributions issues
Foreign missions support
Ministerial tax planning
June 2014 _____________
Ministry Topics from a “Friendly”
Short-Term Missions Trips to “Your Place”
• Handling fundraising
• Qualified expenses
• Reporting
Three Required Ingredients in Any
Successful Family Budget
• A monthly budget
– IN — net payroll checks,
average draws
– OUT — every pay period,
every month, Budget Busters
• A payday method
• Staying on track between paydays
A slap upside
the head!
Gets a couple
talking about
money & priorities
Communications with Your Supporters
• Email often, but keep it short
• Supporters want to hear about your personal
and family needs, both spiritual and practical
• It’s a delicate subject, but supporters said that
they heard the least about your financial needs
and gave the strongest indication of any subject
that they did not hear enough about these

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