Clergy Taxation: Housing Allowances, W-2 Reporting, Deason Rule, Gifts, and Social Security

Recording of a 110-minute CPE webinar with Q&A

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Conducted on Tuesday, May 19, 2020

Recorded event now available

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Course Materials

This course will explain the unique aspects of tax return preparation and planning for members of the clergy. Our panel will cover the treatment of earnings by ministerial employees, including employment by a congregation, retirement income, social security, gifts, and housing allowances.

Description

Housing/Parsonage Allowance: Blessed by the Seventh Circuit, clergy continue to benefit from a housing allowance that allows the exclusion of lodging expenses from income tax. When properly designated, a member of the clergy pays no income tax on his/her housing allowance (within certain limits.) Housing allowance, however, is reportable and taxable for self-employment tax. In some circumstances, even retired clergy can qualify for a housing allowance.

Social Security Participation: In limited circumstances, ministers can elect out of social security. All clergy, even those not electing out, are considered self-employed for purposes of paying into the social security system. No social security is withheld and matched on clergy pay, even for those receiving a Form W-2.

Earnings for Independent Ministry: Clergy regularly receive honorariums or fees for providing additional services, including weddings, funerals, baptisms, and other speaking engagements. Compensation from self-employment activities is reportable on Schedule C. Computing SE income can be the most challenging aspect of ministerial returns. Here, additional income is reported and related expenses are deducted.

Listen as our panel explains the many facets of clergy taxation, including properly designating and reporting housing allowances, determining worker classification for purposes of employee or contractor treatment, deducting expenses, and differentiating non-taxable gifts from taxable income.

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Outline

  1. Who is a minister?
  2. W-2 or independent contractor
  3. Housing allowance
  4. Forms of income including gifts and honorariums
  5. Fringe benefits
  6. Retirement considerations
  7. COVID-19 Relief for Nonprofits

Benefits

Our speaker will review these and other notable issues:

  • Who is a minister for tax purposes?
  • What are deductible housing costs for clergy?
  • What income or benefits are taxable to ministerial employees?
  • How to properly prepare a clergy employee's Form W-2

Faculty

Alston, Abraham
Abraham Alston, Jr., CPA, MS
President
Alston & Company

Mr. Alston specializes in meeting the financial administration and tax needs of churches and other nonprofit...  |  Read More

Hartley, Jean
Jean Hartley
CEO
Hartley Tax & Accounting

Ms. Hartley provides ministers with expert tax consultation concerning ministry tax.  She is a tax accountant...  |  Read More

Laue, Vonna
Vonna Laue, CPA, MBA
Financial Management (Ministry)

Ms. Laue has worked with ministries and churches for over 20 years. She is a former partner for a national CPA firm...  |  Read More

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