| The Rev. Lerrill J. White continues
his commentary on the status of clergy and the
IRS
Clergy
and the IRS: A Reply
In the last issue of PlainViews, I discussed the status of chaplains
as independent contractors and the clergy housing allowance as defined by
the U.S. Internal Revenue Service (IRS). At the end of the article, I invited
readers to share the advice they have received from their accountants this
year.
One reader took the initiative and spoke with
the United Methodist Board of Pensions (which
handles tax questions for their active and
retired clergy). He reports the Board’s position
is that all clergy who are working in a church
or institution are employees, as long as they
receive a paycheck from that church or institution.
Chaplains should receive a W-2 form, the institution
should pay half the Social Security tax, and
the institution should pay (or designate) a
housing allowance in addition to salary.
The housing allowance must be approved before
the beginning of the year by the board of directors
of the institution, then it is deducted from
salary, taxed at the self-employed rate, and
is reported on Schedule SE (along with other
income and expenses). This means the chaplain
is both an employee and self-employed (for
outside work, for which honorariums or other
payment is received). The chaplain must file
Schedule SE along with his/her Schedule 1040,
and Schedule C only if applicable (not for
salary and benefits). Also, a chaplain does
not file Schedule 2106 if his/her institution
pays all business expenses (travel, books,
etc.).
The United Methodist Board of Pensions provides
regular updates about tax matters important
to clergy on their website: http://www.gbop.com where
readers can access the search feature
and then ask for advice related to the housing
allowance and other tax advice for clergy.
This site is particularly helpful in tracking
updates on housing allowance legislation and
judicial challenges.
This article should not be construed as rendering a professional opinion;
rather it is intended to alert chaplains to a possible issue of interest.
Should you have any questions about these issues, you should contact your
accountant or tax advisor. You may also want to speak with your institution’s
accountant or benefits manager.
The Rev. Lerrill J. White, Ph.D., B.C.C.,
is assistant director of Clinical Pastoral Education
at St. Luke’s Episcopal Hospital in Houston,
TX, and has been the liaison to Health & Human
Services for the Association of Clinical Pastoral
Education and Association of Professional Chaplains
since 1983. Chaplain White is a PlainViews Advisory
Board member.
Do you have thoughts about advocacy you’d
like to share with your colleagues? Send
an e-mail to info@PlainViews.org.
|
.gif){kind=spacer}
.gif){kind=spacer}
