Clergy and honoraria

[jasdlm]

Two questions:

1)  Clergy receive honoraria for funerals, but the monies are paid from the Church rather than the funeral home.  I believe these should be added to the Clergy W2. Correct?

2)  Others (non-pastors) receive honoraria for funerals (music, sound, etc.) again paid through the Church.  I believe these have to go through payroll.  Correct?

If the funeral home pays these directly, of course, payroll not affected.

I'm getting pushback so want to confirm others handle these the same way.

Thanks!

[Margaret CPA in OH]

As a former and current church treasurer who also relies on Church and Clergy Tax Guide:

1. Yes, as the clergy are performing pastoral duties. If paid from family or  funeral home, Schedule C.  If paid from the church, the budget line item may be different from the salary line, but still taxable income included on W-2.

2. If the others (non-pastors) are employees of the church and paid through the church, yes, part of payroll.  Again, may be a different account but still employee pay.

Part of the pushback may be coming from 'charitable contributions' made to the church to be passed through to these folks.  This can and does happen.  Employees getting paid from employer for doing their job have taxable income.

[DANRVAN]

2 hours ago, jasdlm said:

but the monies are paid from the Church rather than the funeral home.

How come your Church is paying instead of the funeral home?   I have a funeral home client and take care of books for my Parish, have never seen it done that way.

[Margaret CPA in OH]

I think the funeral home should never be paying church employees for those services.  Why would the funeral home pay church employees for anything?  Or are they outside independent contractors or are they employees of the funeral home and work for the home at various funerals and not for this specific church?

If funeral home is paying the minister, that is part of the clergy Schedule C. 

Who actually works for what entity?

[DANRVAN]

2 hours ago, Margaret CPA in OH said:

Why would the funeral home pay church employees for anything?

Is the Church paid to put on the funeral?  Or compensated for paying pastor and other employees?

From what I have seen, it is customary for the funeral home to pay for the pastor, musicians etc. as part of the cost of providing the funeral.

[Gail in Virginia]

In my experience, which thankfully is limited,  if the funeral home arranges for the minister/musicians, then they pay them.  If the family/deceased has a relationship with the church as members or regular attendees, then the pastor and musicians may perform the services as part of their regular duties.  The family may choose to gift the minister or other staff for their service.  But around here, that typically does not run through either the funeral home or the church in those circumstances but is given directly to the people performing those services. 

[mcb39]

The Priest whose tax returns I have prepared for many years is not considered an employee of the Church, but as a SE Sole Proprietor.  This presents many issues and headaches.  On the rare occasions when he presides over the funeral at the funeral home instead of at the church, he receives a 1099 from the funeral home.  He is also Head Chaplain at a local hospital.  From there, he receives a W2 as an employee.  This is probably one of my most difficult returns because he has his fingers in many pots (ie: rentals, CG., etc)  What I can say in his defense is that he agonizes over his return right along with me.  He trusts and relies on me totally.  He was not born in this Country and is in total fear of the IRS.   You are perhaps wondering why I don't "fire" him.  Because, I morally can't!  He was born and raised in Poland and is the sweetest, holiest person that I know.  I do charge him for what I do and the plus side is that he prays for me, constantly!

[BulldogTom]

1 hour ago, mcb39 said:

 he prays for me, constantly!

Best payment ever!!!!

Tom
Longview, TX

[mcb39]

1 hour ago, BulldogTom said:

Best payment ever!!!!

Tom
Longview, TX

Yes, it is.  I call him Padre and he calls me His Angel!