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2 hours
CTEC IRS NASBA

Tax Rules Related to Ministers and Clergy

Course Description:

While practitioners may be familiar with the basic concepts related to tax exempt organizations, many fail to understand the various exceptions and special rules that apply to ministers. Although tax exemption only applies to organizations, a host of special rules, including certain exemptions from gross income, apply to the individuals that perform ministerial services for churches and religious orders. The issues can be tricky to spot, and a lack of knowledge about the special tax treatment afforded to ministers can result in an over- or under-payment of tax.

This course is designed to remedy any weaknesses the practitioner may have in his or her understanding of the tax rules applicable to ministers. The relevant definitions are explored, as well as the major issues of withholding, self-employment tax, and the parsonage allowance are covered, including other common income and expense issues.

Learning Objectives:

  • Determine the difference in classification of out-of-pocket costs as business expenses or charitable contributions
  • Identify all sources of income and determine which sources are included in gross income, and which sources are included in self-employment income
  • Understand the concepts of burden of proof and donative intent in determining whether a payment is a gift or compensation
  • Become familiar with the rules for payments to retired ministers, including the classification of payments received under a pension plan
  • Understand the rules pertaining to the treatment and classification of the parsonage allowance, fair rental value, and amounts spent on utilities
  • Calculate gross income for federal income tax purposes, as well as self-employment tax purposes
  • Define various clergy-related terms such as religious order, vestments, and vow of poverty

Field of Study: Tax
Course Level: Basic
Prerequisite: None
Delivery Method: QAS / Self Study
Expiration: In accordance with NASBA standards, access to this course will terminate one year from the date of purchase. Incomplete courses will no longer be accessible beyond the one year deadline.

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