Discussion:Support for Associate Pastor Taxable?
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Discussion Forum Index --> Tax Questions --> Support for Associate Pastor Taxable?
| 16 August 2006 | |
| If members of a church donate money to the church and designate that the money be used to support a new associate pastor for living expenses, i.e., food and bills, would the money received by the associate pastor be taxable income? If so, would it also be subject to SE tax? Client received such gifts from church members. The church issued a 1099-misc for the amount he received. We would appreciate any feedback on how best to handle this. | |
| 16 August 2006 | |
I'm sure your question will be answered, but you might try reviewing some of the articles on TaxAlmanac which discuss Minister / Clergy Taxation:
Hope this helps! - Tim Doyle, TaxAlmanac Moderator - Talk to me 20:49, 15 August 2006 (CDT) | |
| 16 August 2006 | |
| Since the money came from the church, this is definitely taxable income to the pastor. A better way to handle this would have been to have the church members give money directly to the pastor as a gift (without any strings attached). | |
| 16 August 2006 | |
| Riley's suggestion would avoid tax to the assoc pastor, but would also preclude a tax deduction on the part of the church member making the donation. Some tax savings could be gained if the board of overseers (elders, deacons or whatever name they take in the church in question) designated all or a portion of the compensation paid to the assoc pastor as housing allowance. Clergy housing allowance is taxable for SE tax but is excluded from income tax. In all likelihood, the compensation should have been paid on a W-2 rather than a 1099, as the pastor is more likely than not an employee (as would be the case for the typical associate pastor hired by the local congregation), not an independent contractor (as might be the case if the pastor were a "circuit rider" shepherding multiple churches and not under the direct supervision of one church). Pastors treated as employees for payroll purposes nonetheless are still treated as self-employed for the purposes of SE tax reporting. So the W-2 would have an amount in box 1 but no amounts in box 3 or 5 of the W-2. | |
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