1. Ten Fundamentals of Clergy Tax

2. 10 Fundamentals of Clergy tax
George Barna – 9 Habits of Highly Effective Churches…Habit #7 - Highly effective churches utilize holistic stewardship practices.
We want to avoid any criticism of the way we administer this liberal gift. For we are taking pains to do what is right, not only in the eyes of the Lord but also in the eyes of man. (2 Cor. 8:20-21)

3. 10 Fundamentals of Clergy tax
The structure of clergy compensation is evidence of the congregation’s stewardship.
Clergy are almost always employees for income tax purposes.
Church’s job to decide
Form W-2
Form 1040

4. 10 Fundamentals of Clergy tax
3. Clergy pay social security as self-employed.
SECA vs FICA
Employer responsibility
Congregation match is taxable
Congregation reimbursement is taxable
Quarterly payments
4. Clergy rarely qualify to opt out of social security.

5. 10 Fundamentals of Clergy tax
5. The housing allowance can be the clergy’s best tax friend.
 Designation vs. Exclusion

6. 10 Fundamentals of Clergy tax
6. Housing Allowance….4 Tests
1. Reasonable compensation
2. Actual Expenses
3. Amount Designated
4. Fair Rental Value

7. 10 Fundamentals of Clergy tax
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

8. 10 Fundamentals of Clergy tax
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!

9. Questions
MBFoundation.com/individual-championingstewardship

10. MB FOUNDATION Jon Wiebe (800) 551-1547 jwiebe@mbfoundation.com
is available to answer questions that you may have regarding
church & clergy issues. Contact us for more information.
Jon Wiebe (800)