FREQUENTLY ASKED QUESTIONS BY INTERIM PASTORS

Transcription

1 FREQUENTLY ASKED QUESTIONS BY INTERIM PASTORS Verne Hargrave, MBA, CPA, CFE PSK LLP 3001 Medlin Drive Suite 100 Arlington, TX

2 FREQUENTLY ASKED QUESTIONS BY INTERIM PASTORS 1. How do I get paid? Am I an employee or an independent contractor? It depends on the terms of the engagement between the pastor and the church. It all boils down to how much CONTROL the church exercises over the pastor. o If an arrangement is simply pulpit supply, payment as an independent contractor will probably result. (1099 issued to the pastor) o Any arrangement beyond simply arriving on Sunday to preach increases the control exercised by the church over the pastor which might result in the pastor being considered an employee. (W- 2 issued to the pastor) NOTE: Increasingly the trend is to pay supply pastors as EMPLOYEES.

3 One way to determine control is by using the IRS 20 Point Test. A yes answer to any of these points is an indication of control. o Behavioral controls: Pastor must follow clear church work instructions Pastor receives on-the-job training Pastor provides services that are integral to the church Pastor has the right to hire and supervise assistants Pastor must follow set hours of work Pastor must work full-time for the church Pastor must do his/her work in a church-determined sequence Pastor is required to submit regular or written reports

4 o Financial controls Pastor receives business expense reimbursements Pastor receives routine payments of regular amounts Church provides the pastor with tools and materials to do the job Pastor has no major investment in job facilities Pastor cannot suffer a financial loss from providing services Pastor only works for one church at a time Pastor does not provide his services to the general public o Relationship controls: Pastor has an ongoing work relationship with the church Pastor provides services that must be rendered personally Pastor does substantially all of his/her work on the church s premises Pastor can be fired by the church Pastor may quit work without any penalty

5 2. Can I ask for the same benefits in an interim position as the permanent pastor predecessor? It depends on the relationship established with the interim church. If the relationship is an employer/employee arrangement, the answer is yes. However, if the relationship is based on an independent contractor arrangement: o If such benefits are paid, the IRS may deem the minister as an employee 3. Can my interim church deem part of my compensation as housing allowance? Yes! A housing allowance is possible for both employee and contractor arrangements. Must follow the same rules as permanent arrangements:

6 4. Can I supervise the staff, even if I am an interim? Once again, it depends on whether the arrangement is employee or contractor. If a contractor arrangement, supervision must be very limited. o Probably limited to simple instructions in conducting worship services. 5. Which committees should I meet with? This also depends on the relationship of the arrangement. It will also vary from church to church.

7 6. Is mileage to and from my interim appointment deductible or reimbursable? If the pastor temporarily changes his/her job location his/her tax home does not change to the new location. o In this situation, the minister can deduct or be reimbursed for his/her travel expenses. Temporary is defined as any period of employment that is realistically expected to last and actually does last one year or less. 1 Any period of employment longer than one year results in the minister s tax home shifting to the new job location eliminating the ability to deduct related travel costs. 7. Can the church pay for an interim minister s hotel bill? Same rules as discussed in Question 6 Tax Home 1 Busby, 2011 Minister s Tax and Financial Guide, page 97.