11 May Non-taxable income for clergy
These are examples of sources of income that are non-taxable:
- Qualified love gifts (person-to-person and within limits)
- Cannot be solicited
- Must be spontaneous in nature
- Must be clearly ascertainable as a gift with no service attached
- Cannot qualify as a tax donation for the donor
- Are motivated out of affection of an individual for another individual
- Professional reimbursements through an accountable plan
- Health reimbursement plans (HRA)
- Housing allowance (federal only)
- Fair rental value of the parsonage (federal only)
- Utilities paid by the church (federal only)
- Flexible spending arrangements
- Ministry expenses only relating to sabbatical compensation
- Group health insurance
- Health saving accounts paid through the church (HSA)
- Ministry mileage reimbursements from an accountable plan
- QSEHRA and ICHRA
- Group life insurance <50,000
- Nominal value Christmas or holiday gifts
- Section 127 Education and student loan payments
Pension payments or retirement allowances received by a minister under a retirement plan of his church are not includible in his net earnings from self-employment for self-employment
tax purposes.
Other kinds of income may be taxable under certain circumstances, but not taxable in other situations.
Original content by clergyfinancial.com. This information is provided with the understanding that Payroll Partners is not rendering legal, human resources, or other professional advice or service. Professional advice on specific issues should be sought from a lawyer, HR consultant or other professional.