Year end is the most deadline-dense period in church finance. W-2s, 1099s, housing allowance re-designations, giving statements, audit prep, budget finalization -- all of it converges in a six-week window between December 1 and January 31. Miss any of it and the consequences range from donor frustration to IRS penalties.
This checklist is organized by deadline. Work through it in order. If you are already behind on something, the notes in each section will tell you what to do.
December: Before the Year Closes
These tasks must happen before December 31. Once the calendar year ends, several of them cannot be corrected retroactively.
Housing Allowance Re-Designation
The board must formally re-designate the housing allowance for every qualifying minister before January 1. This requires a board resolution or documented board action specifying the dollar amount or percentage for the coming year. If this does not happen before December 31, the exclusion is lost for the entire next year. There is no retroactive fix.
If you are behind: Call an emergency board meeting or obtain written board approval before December 31. Email authorization documented in minutes is acceptable if the church's bylaws permit board action by written consent.
Year-End Giving Cutoff Policy
Establish and communicate your year-end giving cutoff clearly. For checks, the postmark date controls -- a check postmarked December 31 counts for the current year even if it arrives in January. For online giving, the transaction date controls. For stock or non-cash gifts, the date of transfer to the church's account controls. Make sure your team knows these rules and applies them consistently.
Review Restricted and Designated Fund Balances
Pull every restricted fund balance before year end. Identify any funds where the restriction or designation purpose has been met or where the project has stalled. Consult with counsel or your accountant before releasing any restricted funds -- the rules on this are strict and violation can create legal exposure.
Process All December Vendor Payments
Any expense you want to recognize in the current fiscal year needs to be paid or accrued before December 31. Do not let vendor invoices sit in the inbox over the holidays. Process them before the year closes.
Collect Outstanding W-9s
Identify every contractor, speaker, and vendor who was paid $600 or more during the year and who has not yet returned a completed W-9. Chase these down in December. You cannot prepare 1099s without them, and the January 31 deadline does not move.
December 31 is a hard deadline for housing allowance designation and fiscal year closing. January 31 is a hard deadline for W-2s, 1099s, and giving statements. Build backward from those dates and do not let the holiday season compress your timeline.
Early January: The First Two Weeks
January 1 to 15 is when the administrative work intensifies. Most of what happens here feeds into the January 31 deadline.
Reconcile All Accounts Through December 31
Every bank account, credit card, and payment processor needs to be reconciled through the last day of the fiscal year before you close the books. Do not start preparing tax forms or financial statements until reconciliation is complete. Errors caught in reconciliation are far cheaper to fix than errors caught after forms have been filed.
Finalize Payroll for the Year
Confirm that all payroll runs for the year are complete and accurate. Verify that housing allowance amounts are correctly reflected -- excluded from Box 1, noted in Box 14. Check that any supplemental payments, bonuses, or year-end gifts to staff are included in the correct pay period.
Prepare W-2s
W-2s must be distributed to employees by January 31. Prepare them as early in January as possible so there is time to catch and correct errors before the deadline. Key items to verify on every W-2:
- Legal name and Social Security Number match IRS records exactly
- Box 1 (federal wages) excludes the designated housing allowance
- Box 14 reflects the housing allowance amount as an informational notation
- Social Security and Medicare wages (Boxes 3 and 5) include the housing allowance -- ministers are self-employed for FICA purposes but non-minister employees are not
- Any retirement contributions, health insurance premiums, or other benefits are correctly coded
Prepare 1099-NECs
1099-NECs must be sent to recipients and filed with the IRS by January 31. Prepare them from your W-9 file and the year's payment records. Double-check every amount against your accounting system. File electronically through the IRS FIRE system or an authorized e-file provider -- paper filing is error-prone and increasingly discouraged.
Prepare Giving Statements
Giving statements must be in donors' hands by January 31 for contributions made in the prior calendar year. See our giving statements guide for the specific requirements. The statement is not optional -- donors cannot deduct their contributions without it, and a statement that is missing required information invalidates the deduction.
January 31 is the deadline for W-2s, 1099-NECs, and giving statements -- all three. Churches that focus on one and forget another create avoidable problems. Build a single checklist with all three deadlines tracked together, not separately.
Late January: Filing and Closing
File W-2s with the Social Security Administration
Copies of all W-2s must be filed with the Social Security Administration by January 31 (for electronic filers) or by the same date (paper filings are no longer recommended). Use Form W-3 as the transmittal cover. Electronic filing through the SSA's Business Services Online is the most reliable method.
File 1099-NECs with the IRS
The IRS copy of all 1099-NECs is due January 31, the same day as recipient copies. File electronically. If you are filing 10 or more information returns, electronic filing is now required by the IRS -- paper filing is no longer an option at that threshold.
Close the Prior Year in Your Accounting System
Once reconciliation is complete and all year-end entries have been posted, close the prior fiscal year in your accounting software. This prevents accidental posting of transactions to the wrong year and locks the final numbers for financial statement preparation.
February and Beyond
Prepare Year-End Financial Statements
Once the books are closed, prepare the full set of year-end financial statements: Statement of Financial Position (balance sheet), Statement of Activities (income and expenses), and Statement of Cash Flows. These go to the board, and for many churches to the congregation as part of the annual meeting.
Begin Budget Process for Current Year
The year-end financial statements are the foundation for the current year's budget review. If the budget was already set before year end, compare actual results to budget and make any adjustments warranted by what the final numbers show.
Schedule the Annual Audit or Review
Churches above approximately $500,000 in annual revenue should consider an independent financial review or audit. Some lenders and denominational bodies require it. If you have not already scheduled one, do so in January or February while the year-end numbers are still fresh.
How Dime Handles This
Year-end is the highest-stakes period in the church finance calendar, and it is exactly when having a professional team matters most. We manage the entire year-end process for our church clients -- reconciliation, W-2 and 1099 preparation and filing, giving statement review, housing allowance documentation, and financial statement preparation. Nothing falls through the cracks because we are tracking it all.
If your church is managing year-end on its own and feeling the pressure, or if last year's year-end left loose ends that still have not been resolved, reach out to our team. We would rather hear from you in November than in February.