Starting in July 2021 over 80 million American households become eligible to receive a new payment from the Internal Revenue Service. An increased child tax credit has allowed for monthly payments of $300 per child aged 5 and under, and $250 for each child aged between 6 and 17 to be sent as advances for the Child Credits found on next year’s (2021) Federal Income Tax return.
In the latest round of COVID legislation, the ERTC was made available to more businesses, including churches. The ERTC is a tax credit that’s rewards are two-fold: rewarding employers who have retained employees during COVID and thus providing cash to continue providing these jobs.
But churches do not pay taxes, how can they get a refund from the IRS?
Although churches are exempt from paying income tax, most churches do submit and pay in for payroll taxes. The ERTC is a credit against the Social Security taxes withheld by employers, including those taxes withheld by churches.
Vertigo: “Confusion resulting from misleading information sent to the brain.”
Vertigo occurs in pilots when they fly in hazy conditions and lack any reference to the reality of the horizon. Without reference to objective truth, the horizon, it is possible for pilots to fly their airplanes into the ground while thinking they were flying level.
Church accounting systems can also suffer vertigo. Unless there is a connection to objective truth outside the system, the accounting may become out of touch with reality – possibly causing a crash to the ground.
To allow flexible work arrangements, receive updates more quickly, and work more efficiently, many churches are migrating their business solutions to the cloud. Many have already moved to the cloud and are experiencing the benefits of having software available wherever they are rather than being tied to a specific desktop. If you are using the desktop version of QuickBooks, we would recommend making the move to Intuit’s cloud-based solution, QuickBooks Online (QBO) one of Wisdom’s preferred accounting software solutions.
Allison Michaud gives a step-by-step video of how to apply for PPP Draw 1 & Draw 2. Please Contact Us if you have any questions!
Links mentioned in the video:
Or, do you need the confidence that a CPA looked at your church’s books?
The term “audit” has been used in church circles to refer to having an CPA look at the books, exercise their professional judgment, and give accounting support. In the world of CPAs, a traditional audit requires many regulations and procedures that we have found many churches and nonprofits do not benefit from. We at Wisdom have found another option: Financial Statement Preparation.
