Ten Fundamentals of Clergy Tax by Jon Wiebe #sdc2013



"Highly effective churches utilize holistic stewardship practices."      
         George Barna, 9 Habits of Highly Effective Churches

2 Corinthians 8:20-21

1. The structure of clergy compensation is evidence of the  congregation's  stewardship.
2. Clergy are almost always employees for income tax purposes
Form W-2, Form 1040

3. Clergy pay social security as self-employed.
must be ordained, licensed, or commissioned
employer responsibility
congregation match is taxable
Quarterly payments
4. Clergy rarely qualify to opt out of social security.
theologically object to tax not for financial reasons

5. The housing allowance can be the clergy's best tax friend.
Designation vs. Exclusion
6.  4 Tests (lower of 4)
Reasonable compensation
Actual Expenses
Amount Designated
Fair Rental Value (15% of Tax Assessment)

7. Tax-free and tax-deferred fringe benefits increase your take home compensation
Nondiscriminatory
Good stewardship of resources
8. Properly handling clergy business expenses starts with an accountable expense reimbursement                              plan.
Budgeted expenses
Accountable system

9. Fees and honoraria must be reported as income.
Paid by congregation-W-2
Not paid by congregation-1099-MISC

10. Charitable giving is tax deductible!

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