Disability Insurance – The church can reimburse its pastor for this premium or pay it directly.
Health Insurance – Group health insurance plans are a qualified fringe benefit. If the church does not qualify for a group plan because there is only one employee, you will need to establish either a One Person Health Reimbursement Arrangement.
Health Reimbursement Arrangement – This is an amount that the church sets aside to be used for reimbursement of non-covered medical expenses. Left-over funds may be carried forward to the following year. An HRA is subject to discrimination laws and all employees would receive the same amount.
Housing Allowance – This is a part of the pastor’s salary which is designated to be available for housing costs. This needs to be approved by the board or church in writing and in advance of expenses. The portion of this designation which is used to provide housing is exempt from Federal Income taxes, but not self-employment tax (Social Security/Medicare).
Life Insurance – The church may provide up to $50,000 group term life. Other life insurance plans are taxable.
Accountable Reimbursement Plan – The church must require receipts (it is not enough for the pastor to voluntarily substantiate his expenses). This is a “use it or loose it” proposition; any unused portion cannot become salary.
Tax Sheltered Annuity (403-b) – The church contributes directly to the financial institution chosen. The Pastor or church determines the amount of the contribution, which would exclude it from taxes.
Clergy Financial Resources offers several options to help you with your tax questions or filing. Pro Advisor below is a great option to get started.
- Pro Advisor I Tax Support
This support service provides you comprehensive answers to your notice questions. This support service is available at a flat rate of $45.00 for each 30-minutes session.
Clergy Financial Resources serves as a resource for clients to help analyze the complexity of clergy tax law, church payroll & HR issues. Our professionals are committed to helping clients stay informed about tax news, developments and trends in various specialty areas.
This article is intended to provide readers with guidance in tax matters. The article does not constitute, and should not be treated as professional advice regarding the use of any particular tax technique. Every effort has been made to assure the accuracy of the information. Clergy Financial Resources and the author do not assume responsibility for any individual’s reliance upon the information provided in the article. Readers should independently verify all information before applying it to a particular fact situation, and should independently determine the impact of any particular tax planning technique. If you are seeking legal advice, you are encouraged to consult an attorney.
For more information or if you need additional assistance, please use the contact information below.
Clergy Financial Resources
11214 86th Avenue N.
Maple Grove, MN 55369
Tel: (888) 421-0101
Fax: (888) 876-5101
Email: clientservices@clergyfinancial.com