TN 10 (08-04)

Citations:Section 211(a)(1) of the Act, Section 404.1091 of Regulations No. 4. Social Security Act

A. POLICY

1. Included Items

A minister includes as gross income:

• Salary;

• Fees and honoraria for officiating at weddings, christenings, funerals and other services in the exercise of the ministry;

• Rental allowance for a parsonage or value of a parsonage furnished to him;

• Value of meals when furnished as part of his compensation; and

• Travel and automobile allowances, although these same items will be deducted as business expenses if incurred in the performance of his duties.

2. Excluded Items

A minister excludes from gross income:

• Pensions and retirement pay;

• Parsonage or housing allowances when included in retirement pay after the minister retires, or any other retirement benefit received after retirement pursuant to a church plan as defined in Section 414(e) of the Internal Revenue Code, must be excluded when computing NESE. For example, if a minister retires from Church A and the rental value of a parsonage or any other allowance is included in his/her retirement pay the parsonage allowance must be excluded when determining NESE. However, if this same retired minister goes to work for Church B and is paid a parsonage allowance by Church B this new income must be included when computing NESE.

• Gifts, unless they are understood to be part of his compensation.

B. REFERENCE

IRS Publication 517, Social Security for Members of the Clergy and Religious Workers.