Salary Suggestions & Considerations - January 1 - December 31, 2013 for Pastors, Teachers
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Salary Suggestions
& Considerations
January 1 – December 31, 2013
for Pastors, Teachers, and
Other Professional Church Workers
South Wisconsin District
The Lutheran Church—Missouri Synod
Phone: (414) 464-8100 In Wisconsin (800) 793-3678
8100 West Capitol Drive, Milwaukee, Wisconsin 53222
Website: swd.lcms.org
October 2012 Dear friends and fellow servants: We are pleased to share with you the 2013 Salary Suggestions & Considerations for pastors, teachers and other professional church workers. The document is available on the District website, under Resources. While we recognize that there are a wide variety of economic and other situations among congregations and schools throughout the South Wisconsin District, we know that the Scriptures do share words of wisdom and direction regarding compensation for those who serve in our congregations, schools, and other agencies. Consider especially the words of St. Paul to Timothy in his first book, chapter 5 and to the Christians at Philippi in chapter 4. As you seek to care for those who serve you in ministry, we encourage you to demonstrate that genuine care and concern for the professional church workers and their families in your midst. To that end the Suggested Salary Schedule has been increased by only 2%. As you consider compensation and benefits for your next budget, we encourage you to provide the best that you can for those who serve in your midst. We are confident that the supplemental resources in the document will assist you in the planning process. God’s richest blessings to you now and always! In His Service, Rev. Dr. John C. Wille Mark L’Heureux President Superintendent of Schools
Table of Contents Preamble & Purpose ............................................................................................................... 1 Suggestions for Implementation ............................................................................................. 2 General Information Compensation Schedule ......................................................................................................... 3 Salary Schedule Worksheet and Directions ......................................................................... 4-5 Preschool & Daycare Salary Schedule ................................................................................... 6 Additional Responsibilities and Compensation Information ................................................ 7-9 Guest and Visiting Pastors’ Compensation ........................................................................... 10 Examples of Computations .............................................................................................. 11-13 Worksheet — Compensation ................................................................................................ 14 Worker Salary and Benefit Information ................................................................................. 15 Congregation Treasurer’s Manual — Housing Allowance Information Reduction in Force & Severance
Preamble
Pastors, teachers and other professional church workers are gifts from God to the people and
congregations (associations) of our District (Ephesians 4:11). Implied in these words are all professional
workers. Our care of these workers reflects our own high regard for the divinely instituted Office of the
Holy Ministry (Galatians 6:6). All workers are due a salary comparable to their professional peers,
house or housing allowance, and health, retirement and survivor benefits (I Timothy 5:18). Those who
have demonstrated unusual faithfulness in their labors certainly deserve additional consideration (I
Timothy 5:7).
Proper care for our workers means more than just financial compensation (I Thessalonians 5:12-13). We
want our workers to devote sufficient time to their personal lives, lest in tending the household of God
they neglect their own families to their sorrow and the disgrace of the church (I Timothy 3:4-5).
Therefore, it is meet, right and salutary that the congregation (association), through its responsible
officers, should ensure adequate vacation and weekly rest.
We also desire emotional support for our workers, their spouses and children, as they conduct their
ministries, to encourage a radiant and joyful sharing of the Gospel. So we remind each other to pray for
them, to encourage them by our words and actions and to appreciate their need to gather frequently with
other peers and professionals.
Continuing education is also important. Our workers need to relate to the issues of the day in order that,
through their understanding, our witness to the world might be winsome and persuasive. The
congregation (association) will want to make time and funds available for the worker’s continuing
education (II Timothy 2:15).
Purpose
These compensation guidelines are designed to encourage fair and equitable compensation within the
pastoral, teaching and related ministries of our District on the basis of:
• Years of experience
• Professional growth and/or formal education
• Levels of responsibility
We are also committed to equal pay for equal work for both men and women. Normally, workers
serving on a ten-month contract were given 10/12 of the appropriate salary classifications.
Congregations (associations) are encouraged to consider placing all contract teachers on a twelve-month
contract after two years of satisfactory service.
1Suggestions for Implementation & General Information
I. ORGANIZATION
Pray often for God’s blessing on your task.
Appoint a special committee to study salaries and benefits for all workers in your midst. You
will want to include members of your boards of: education, elders, stewardship and other
appropriate boards and committees. Your pastor(s) and principal might also be advisory
members of this committee.
Collect materials, resources and statistics that include the following information (but does not
exclude additional information):
South Wisconsin District Suggested Salary and Benefit Considerations.
Your present salary and benefit schedules and policies.
Local public school salary and benefit information.
Other statistical information about your community (available at such locations as your
local public or college libraries, city hall, county courthouse, chamber of commerce,
public utilities). You may want to look for information, for example, on how your
community or county compares to others in the area.
II. STUDY
Consider the following:
The purpose and mission of your congregation (association) and its ministries including the
Christian day school where one exists.
A careful and honest evaluation of present salaries and benefits offered to your workers. (The
guidelines provide a tool for comparison.)
A comprehensive study of job descriptions, responsibilities, expectations and division of
tasks among staff persons.
A thorough comparison of community statistical information including salaries and benefits
paid in your local public schools and other professional personnel. (Check your local library
for sources.)
A review of your congregation’s (association’s) financial resources, funding patterns and
capabilities.
A study of alternative funding sources including tuition, third source funding, establishing a
foundation to benefit the educational program, fraternal agencies and other opportunities
which may be unique to your congregation and community.
A study of the salary and benefit suggestions of the South Wisconsin District.
III. ACTION
Establish a plan for coordinating your findings with the salary and benefit suggestions of the
South Wisconsin District.
Consider a plan for implementation which will effectively install your guidelines over a
period of time (for example 85% of goal in the first year, 92% in the second year and 100%
in the third year).
Share the specifics of their personal salary and benefit packages with each of your workers
(salary, Concordia Plans, other benefits). A sample form is included at the end of this
booklet.
Continue to pray for God’s blessings on the pastoral, educational and outreach ministries to
congregation (association) and community.
2South Wisconsin District Suggested Salary Schedule Base 12 Month Salary
January 1, 2013 — December 31, 2013 $37,711
Year Factor BA Factor MA Factor MDIV/PHD-ED Factor STM/DMIN Factor PHD/THD
0 1.000 37,711 1.100 41,483 1.250 47,139 1.300 49,025 1.350 50,910
1 1.040 39,220 1.140 42,991 1.290 48,648 1.340 50,533 1.390 52,419
2 1.080 40,728 1.180 44,499 1.330 50,156 1.380 52,042 1.430 53,927
3 1.120 42,237 1.220 46,008 1.370 51,665 1.420 53,550 1.470 55,436
4 1.160 43,745 1.260 47,516 1.410 53,173 1.460 55,059 1.510 56,944
5 1.200 45,254 1.300 49,025 1.450 54,682 1.500 56,567 1.550 58,453
6 1.230 46,385 1.340 50,533 1.490 56,190 1.540 58,076 1.590 59,961
7 1.260 47,516 1.380 52,042 1.530 57,699 1.580 59,584 1.630 61,470
8 1.290 48,648 1.420 53,550 1.570 59,207 1.620 61,093 1.670 62,978
9 1.320 49,779 1.460 55,059 1.610 60,715 1.660 62,601 1.710 64,487
10 1.350 50,910 1.500 56,567 1.650 62,224 1.700 64,109 1.750 65,995
11 1.370 51,665 1.530 57,699 1.680 63,355 1.730 65,241 1.780 67,126
12 1.390 52,419 1.560 58,830 1.710 64,487 1.760 66,372 1.810 68,258
13 1.410 53,173 1.590 59,961 1.740 65,618 1.790 67,503 1.840 69,389
14 1.430 53,927 1.620 61,093 1.770 66,749 1.820 68,635 1.870 70,520
15 1.450 54,682 1.650 62,224 1.800 67,881 1.850 69,766 1.900 71,652
16 1.456 54,908 1.656 62,450 1.806 68,107 1.856 69,992 1.906 71,878
17 1.462 55,134 1.662 62,676 1.812 68,333 1.862 70,219 1.912 72,104
18 1.468 55,360 1.668 62,903 1.818 68,559 1.868 70,445 1.918 72,331
19 1.474 55,587 1.674 63,129 1.824 68,786 1.874 70,671 1.924 72,557
20 1.480 55,813 1.680 63,355 1.830 69,012 1.880 70,898 1.930 72,783
21 1.486 56,039 1.686 63,581 1.836 69,238 1.886 71,124 1.936 73,009
22 1.492 56,265 1.692 63,808 1.842 69,464 1.892 71,350 1.942 73,236
23 1.498 56,492 1.698 64,034 1.848 69,691 1.898 71,576 1.948 73,462
24 1.504 56,718 1.704 64,260 1.854 69,917 1.904 71,803 1.954 73,688
25 1.510 56,944 1.710 64,487 1.860 70,143 1.910 72,029 1.960 73,914
26 1.716 64,713 1.866 70,370 1.916 72,255 1.966 74,141
27 1.722 64,939 1.872 70,596 1.922 72,481 1.972 74,367
28
Key 1.728 65,165 1.878 70,822 1.928 72,708 1.978 74,593
29 BA 1.734 65,392 1.884 71,048 1.934 72,934 1.984 74,819
30 Bachelor Degree 1.740 65,618 1.890 71,275 1.940 73,160 1.990 75,046
31 MA 1.745 65,806 1.895 71,463 1.945 73,349 1.995 75,234
32 Master Degree 1.750 65,995 1.900 71,652 1.950 73,537 2.000 75,423
33 MDIV 1.755 66,184 1.905 71,840 1.955 73,726 2.005 75,611
34 Master in Divinity 1.760 66,372 1.910 72,029 1.960 73,914 2.010 75,800
35 PHD-ED 1.765 66,561 1.915 72,217 1.965 74,103 2.015 75,989
36 Dr. of Education 1.770 66,749 1.920 72,406 1.970 74,292 2.020 76,177
37 STM 1.775 66,938 1.925 72,595 1.975 74,480 2.025 76,366
Master of Sacred
38 1.780 67,126 1.930 72,783 1.980 74,669 2.030 76,554
Theology
39 1.785 67,315 1.935 72,972 1.985 74,857 2.035 76,743
DMIN
40 Doctor of Ministry
1.790 67,503 1.940 73,160 1.990 75,046 2.040 76,931
41 1.795 67,692 1.945 73,349 1.995 75,234 2.045 77,120
PHD/THD
42 Doctor of 1.800 67,881 1.950 73,537 2.000 75,423 2.050 77,308
43 Philosophy/Theology 1.805 68,069 1.955 73,726 2.005 75,611 2.055 77,497
44 1.810 68,258 1.960 73,914 2.010 75,800 2.060 77,686
45 1.815 68,446 1.965 74,103 2.015 75,989 2.065 77,874
ADDITIONAL EDUCATION: Congregations are encouraged to recognize levels of educational attainment in addition to those listed. A method such as the
following could be used for any educational level so identified. The amount would be added to the worker's other compensation figures.
Educational Level Additional Compensation
Teacher - BS or BA and seeking MS or MA 5% of BA base-year 0 $1,886
Pastor - MDIV and seeking DMIN or STM 2.5% of MDIV base-year 0 $1,178
3South Wisconsin District S=Single, F=Family, H=self & kids, C=self /spouse, SS=social security, O=offset
Suggested Salary Schedule Worksheet Degrees: BA, MA, MDIV/PHD-ED, STM/DMIN, PHD/THD
January 1, 2013 – December 31, 2013 * If parsonage/teacherage use 125% or more
1 2 3 4 5 6 7 8 9 11 12 13 14 15
Name Yrs. Exp S/F/H/C SS / O S.E. % Spc $Alw Degree % to scale Duty Adj % Home %* Gross salary Net Income Home allow Concordia Ins Total Value
100.0% $ - $ - $ - $ - $ -
100.0% $ - $ - $ - $ - $ -
100.0% $ - $ - $ - $ - $ -
100.0% $ - $ - $ - $ - $ -
100.0% $ - $ - $ - $ - $ -
100.0% $ - $ - $ - $ - $ -
100.0% $ - $ - $ - $ - $ -
100.0% $ - $ - $ - $ - $ -
100.0% $ - $ - $ - $ - $ -
100.0% $ - $ - $ - $ - $ -
4
100.0% $ - $ - $ - $ - $ -
100.0% $ - $ - $ - $ - $ -
100.0% $ - $ - $ - $ - $ -
100.0% $ - $ - $ - $ - $ -
100.0% $ - $ - $ - $ - $ -
100.0% $ - $ - $ - $ - $ -
100.0% $ - $ - $ - $ - $ -
100.0% $ - $ - $ - $ - $ -
100.0% $ - $ - $ - $ - $ -
100.0% $ - $ - $ - $ - $ -
Sum Total $ - $ - $ - $ - $ -
CPS retirement rate Single 8.70% Multi 8.70% CPS Med Single 542 Family 1446 Self/kids Self/spouse
To begin, insert the amounts based on your plan suggestion that you wish to use for retirement rates and medical insurance monthly rates on worksheet row 28 just above this line.
For an interactive version of this worksheet, visit our website at swd.lcms.org, and click on Resources for the Suggested Salary Guidelines 2013.Directions for using Suggested Salary Schedule Worksheet
1. Column One insert name.
2. Column Two (Year exp) insert years of experience. Range runs from "0 to 45."
3. Column Three (s/f/h/c) determines the insurance status of the individual. S= single no dependants; F=Family which includes spouse and children; H=worker and children only; C=worker and
spouse with no dependants. If you wish to show no insurance, leave blank.
4. Column Four (ss/o) (ss) stands for social security and (o) stands for offset retirement payment. For those rostered (commissioned or ordained) leave this column blank unless they are due an
offset payment. Then place "o" in the column. All other employees required social security matching of the employee's payment. To account for this place "ss" in this column. If you're going to
provide self-employment assistance in, place the % amount in the S.E.% column.
5. Column Five (Spc $ Alw) is for special dollar allowances that are given the worker i.e. car allowances, working toward an additional degree, or any other cash payments. Type in the dollar amount
in this column.
6. Column Six (Degree)—These degree designations are entered into the column as found in the Salary Guideline. Please enter the degree exactly as printed and shown above the work sheet i.e.
MDIV/PHD-ED. You do not need to capitalize the letters.
7. Column Seven (% to scale) allows organizations to adjust the guidelines to their unique situation. So, if your group is above or below the guideline, all that is necessary is to type in the percentage
i.e. 110 or 90.
8. Column Eight (Duty Adj %) allows for the adjustment of salaries because of special duties, responsibility, or consideration i.e. Principle, Coaching, Senior Pastor, Director of Christian Education.
5
Just type in the percentage that is desired—4%, 10%, etc.
9. Column Nine (Housing %) shows what percent a rostered individual wishes to take for housing. The amount designated, which must be properly supported with actual expenses is not included in
the state and federal income tax calculation; but is included in the self employment tax. If the individual was given a parsonage or teacherage, please enter a % i.e.125% to properly show the value
of the house being provided and to assure that his/her retirement plans are being properly calculated. If the person owns or rents their home then the %, which needs to be substantiated, is
entered and should normally be less than 100%. If the person is not rostered, nothing should be entered in this column.
10. Column Eleven (Gross Salary) is an automatic calculated column that represents the value of the salary with housing. Note that a non-rostered individual who is not eligible for housing will find this
number to be the same as (col 12) Net Income.
11. Column Twelve (Net Income) is an automatic calculated column that includes salary, special allowances (col 5), and additional duties (col 8) less the home allowance (col 13).
12. Column Thirteen (Home Allow) is the amount that has been identified by the worker as housing allowance and is based on the percentage from (col 9) and the salary from the Salary guideline
table adjusted for special $ alw (col 5), % to scale (col 7) and duty adj % (col 8).
13. Column Fourteen (Concordia Ins) is a calculated column estimating the cost for Insurance Benefits for the purpose of budgeting. This is an estimate only and the actual amount must be received
from Worker Benefits in St. Louis. Insurance is based on Concordia Plans for the 53222 zip code. This estimate includes Health, Disability, and Retirement.
14. Column Fifteen (Total Value) is a calculated column for the total of the net income (col 12), home allowances (col 13), and Concordia Insurance (col 14), plus any H.E.P. (col 10), and social
security match or offset payment if appropriate.Preschool and Daycare Salary Schedule
Following is an offering for preschools and daycares. Please note that it gives a suggested hourly wage
based on degree, years of service, position, and completion of Early Childhood certification noted as
EC-I and EC-II. The chart has been developed from extensive research done covering daycares and
preschools found mostly in the southeastern Wisconsin. Please call the district business office if you
have any questions, contribution of additional information or would like to comment on improvements.
The phone number is (414) 464-8100 or (800) 793-3678.
To use the chart, just select the correct category the worker falls in and multiply it times the number of
hours worked per week.
2013 Suggested Salary Schedule
Pre-school & Daycare Workers
Based on an hourly rate
Bachelor Degree Bachelor
Enrolled in (non-Ed.) plus Degree in
Years of EC-I & EC-I & EC-II EC-I & EC-II EC-I & EC-II EC-I & EC-II or 2 Elementary Ed
Service EC-II No Degree No Degree No Degree Year AA - EC or EC
Daycare & Daycare &
Lead Lead Lead Lead
Assistant Assistant
Daycare Teacher Teacher Teacher
Teachers Teachers
0-2 $9.03 $10.41 $10.96 $11.80 $14.01 $16.22
3-4 $10.70 $11.24 $12.35 $14.56 $16.78
5-6 $10.96 $11.52 $12.90 $15.12 $17.33
7-8 $11.24 $11.80 $13.45 $15.67 $17.90
9-10 $11.52 $12.06 $14.01 $16.22 $18.44
11-12 $11.80 $12.35 $14.56 $16.78 $19.00
13-14 $12.06 $12.63 $15.12 $17.33 $19.54
15+ $12.35 $12.90 $15.67 $17.90 $20.10
6Additional Responsibilities and Compensation Information
As you determine the percentages to use for each staff person, it is important that you carefully examine
the role that each person serves in the school and congregation (association). The size of the school and
congregation (association), the scope of the extra responsibility, the amount of time necessary to
complete the tasks and the amount of experience and training are usually taken into consideration. It is
expected that the nature and scope of the task will vary from school to school and congregation
(association).
Congregations (associations) may wish to consider increasing the percentages as evaluations of the tasks
are completed.
SUGGESTED PERCENTAGES FOR ADDITIONAL RESPONSIBILITIES
SENIOR PASTORS
0-400 Communicants 0% of Base Salary; Year 0
401-800 Communicants 20% of Base Salary; Year 0
801-1200 Communicants 25% of Base Salary; Year 0
Over 1200 Communicants 30% of Base Salary; Year 0
More than one congregation 10% of Base Salary; Year 0
Assistant or Associate Pastors congregation or association size can be determined by dividing the total
number of communicant members by the total number of professional church workers serving.
TEACHERS
Principal
0-150 Students 15% of Base Salary; Year 0
151-300 Students 20% of Base Salary; Year 0
Over 300 Students 25% of Base Salary; Year 0
Assistant Principal
0-150 Students 7.5% of Base Salary; Year 0
151-300 Students 10% of Base Salary; Year 0
Over 300 Students 12.5% of Base Salary; Year 0
Athletic Director 4-8% of Base Salary; Year 0
Music Director 4-8% of Base Salary; Year 0
Youth Director 4-8% of Base Salary; Year 0
Other Extracurricular 1-5% of Base Salary; Year 0
DCE, DCO, Lay Minister, Deaconess, 4-12% of Base Salary; Year 0 determined
and other professional workers by responsibilities
(see p. 13 for illustrations)
Congregations (associations) are encouraged to adjust the various salary situations based on unique local
situations.
7YEARS OF EXPERIENCE
If the professional church worker has entered the ministry after having served for some period of time in
another profession, the congregation (association) may wish to recognize that an entry salary into the
ministry may be inadequate compensation. In such a case, some provision is made to recognize the
experience, skills and maturity such a person brings to the ministry. For example, the congregation
(association) may consider as a base point on the proposed salary scale, a point equal to a percentage of
the years served in the previous profession. (Example: 20 years in another field of work may bring
important maturity and skills that are valued at 60% of the experience scale: therefore the starting salary
would be on the basis of twelve [12] years of experience.)
The years of experience for teachers are generally understood to be the period of time workers have
been employed in their profession, including years of service in public schools and other Lutheran
schools.
CONCORDIA PLANS
We suggest that congregations (associations) pay the entire cost of retirement and survivor plans and the
full cost of the health plan. Consult the current Concordia Plan Services booklets for further details.
SOCIAL SECURITY TAX
Ministers of the Gospel, ordained and commissioned, participate in the Social Security system as self-
employed persons and they are taxed 15.3%. It is strongly recommended that congregations
(associations) assist Ministers of the Gospel on roster with a 7.65% self-employment assistance income
add on. This is the approximate equivalent of paying the Social Security match for non-rostered
individuals, which is required by law.
HOUSING ALLOWANCE
Enclosed for your assistance, following page 15, is Section 2.100-2.900 “Housing Allowance” from the
Congregational Treasurer’s Manual.
CONTINUING EDUCATION
Each congregation (association) is encouraged to provide opportunities for continuing study by its
workers. Such provision usually includes both a time and a monetary allowance. Congregations
(associations) are encouraged to provide the entire expense if possible.
8AUTO ALLOWANCE and BUSINESS EXPENSES
The congregation (association) may wish to make auto allowances for operating expenses and
replacement cost as well as business expenses incurred by the professional church worker on behalf of
the congregation/school as approved by the IRS. Because the laws continue to change, congregations
(associations) are encouraged to seek legal advice regarding ways for providing these allowances.
Most generally though, to minimize tax impact to the worker, a direct accountability program is the best
(an expense reporting system). This means that the congregation (association) requires that the worker
keep and submit exact expense records according to IRS regulations for monthly or bimonthly
reimbursement. Examples would be mileage, business meals and travel, required periodicals, training
fees, etc. See conventions and conferences below, which would also be included in this direct
accountability reporting.
VACATIONS
Congregations (associations) are encouraged to establish a definite policy regarding vacations, such as
the following:
After 1 year of experience — 2 weeks
After 5 years of experience — 3 weeks
After 10 years of experience — 4 weeks
Vacation is based on total years of experience of a professional.
The vacation policy is intended to apply for those who are considered full-time workers. Congregational
(associational) policies regarding those who are considered less than full-time (10 or 11 months, for
example) may have to be adjusted to reflect the needs and current practices of the congregation
(association). In addition to the regular vacation, congregations also may provide pulpit relief for pastors
once a quarter.
CONVENTIONS and CONFERENCES
Expenses are to be paid by the congregation (association) for all regular synodical conventions and
conferences. Additional expenses may be paid for other optional conferences at the discretion of the
congregation (association).
LEAVE OF ABSENCE
A leave of absence is an authorized period of time off the job, with or without pay, and is granted at the
discretion of the congregation (association). It is essential that each congregation (association) adopt
appropriate policies in advance of requests. These policies should outline criteria and procedures for
dealing with leaves of absence.
9Guest and Visiting Pastors
Reimbursement suggestions for guest and visiting pastors: These pastors spend a great quantity of
time preparing for the service(s) and Bible class studies when required. In addition these individuals are
incurring travel expenses.
Therefore, when asking a pastor to cover services or when inviting him for special services and/or
celebrations where special preparation is required, please consider the following:
Cover all travel expenses including meals, mileage/transportation cost, and housing if
necessary
$150 for the first service
$50 per service and/or Bible class study thereafter
Example: Pastor John is asked to cover the services of Anywhere Lutheran Church. Anywhere has a
Thursday night service, a Saturday night service and two Sunday services with a Bible study in between.
Pastor John lives 100 miles away from Anywhere Lutheran Church.
Thursday Night Service Total mileage Rate Total
Mileage round trip 200 $0.565 $ 113.00
Supper (actual cost) $ 5.92
Preparation & conducting of first service $ 150.00 $ 150.00
Thursday Total $ 268.92
Saturday Night Service
Mileage - half trip 100 $0.565 $ 56.50
Supper (actual cost) $ 6.38
Conducting service $ 50.00 $ 50.00
Motel Expense (actual cost) $ 49.15
Saturday Total $ 162.03
Sunday Services
Mileage - half trip 100 $ 0.565 $ 56.50
Breakfast (actual cost) $ 5.75
Lunch (actual cost) $ 7.87
Conducting two services $50/service $ 100.00
Conducting Bible Study $ 50.00 $ 50.00
Sunday Total $ 220.12
*56.5 cents/mile is the most allowed by the IRS without any further substantiation other than a mileage
log, effective January 1, 2013. For current rates see the IRS website at irs.gov.
10Examples of Computations
EXAMPLES OF PASTOR SALARIES
1) No experience, MDIV degree, congregation of 300 communicants, self-employment assistance:
Base salary (MDIV/PHD-ED; year 0) $ 46,215
7.65% Self-employment assistance $ 3,535
50.0% Requested allowance for owned home $ 24,875
For determining housing % see Treasurer’s Manual 2.1-2.9
Estimated gross salary for Federal and State income tax $ 24,875
Total cash given which includes worker owned housing % request $ 49,750
Total value equivalent of salary for self-employment tax $ 49,750
2) Six years experience, MDIV degree and 1/2 STM, house provided and is agreed that it should
represent 25% of base salary (and passes IRS requirements), self-employment assistance, 600
communicants:
Base salary (MDIV/PHD-ED; year 0) $ 46,215
MDIV/PHD-ED base salary at year 6 $ 55,008
25.0% Value associated with parsonage 25% of base salary
(25% of MDIV base at year 0 ) $ 11,554
Fair rental value see Treasurer’s Manual 2.1-2.9
2.5% Adjustment for 1/2 STM (See bottom of Salary Schedule, page 3) $ 1,155
20.0% Pastor of 600 communicants
MDIV/PHD-ED; year 0 x 20% (see page 7) $ 9,243
Base cash salary (MDIV/PHD-ED; year 6 ($61,716 - $10,889) $ 53,853
7.65% Self-employment assistance $ 4,120
Estimated gross salary for Federal and State income tax $ 57,972
Total cash given plus the value of the parsonage $ 69,526
Total value equivalent of salary for self-employment tax $ 69,526
3) Five years experience, MDIV, associate pastor, 1224 communicants, self-employment tax assistance,
requested housing allowance of 55%, works with deaconess:
Base salary (MDIV/PHD-ED; year 0) $ 46,215
MDIV/PHD-ED base salary at year 5 $ 53,609
20.0% Size of congregation - associate pastor
(1224 comm. divided by 2 pastors & deaconess = 408, see page 7) $ 9,243
7.65% Self-employment assistance ($50,522+$8,711) $ 4,808
55.0% Requested allowance for owned home $ 37,213
For exact amount see Treasurer’s Manual 2.1-2.9
Estimated gross salary for Federal and State income tax $ 30,447
Total cash given which includes worker owned housing % request $ 67,660
Total value equivalent of salary for self-employment tax $ 67,660
11EXAMPLES OF TEACHER SALARIES
1) One Year experience, BA, on Synod roster, coaching and Sunday school director, self-employment
assistance, request 40% housing allowance:
Base salary (BA; year 0) $ 36,972
Base salary (BA; year 1) $ 38,451
7.0% Extra duties-S.S.D. and coaching (BA;year 0 x [3%+4%], see page 7) $ 2,588
7.65% Self-employment assistance $ 3,139
40.0% Requested allowance for owned home $ 17,671
For exact amount see Treasurer’s Manual 2.1-2.9
Estimated gross salary for Federal and State income tax $ 26,507
Total cash given which includes worker owned housing % request $ 44,179
Total value equivalent of salary for self-employment tax $ 44,179
2) Fifteen years experience, masters, on Synod roster, principal - school of 168, requested housing
allowance 48%, self-employment assistance:
Base salary (MA; year 0, see page 3) $ 39,872
Base salary (MA; year 15, see page 3) $ 59,808
20.0% Add for principal - school 151-300 (MA; year 0, see page 7) $ 7,974
7.65% Self-employment assistance $ 5,185
48.0% Requested allowance for owned home $ 35,025
For exact amount see Treasurer’s Manual 2.1-2.115
Estimated gross salary for Federal and State income tax $ 37,943
Total cash given which includes worker owned housing % request $ 72,968
Total cash value equivalent of salary for self-employment $ 72,968
3) Fifteen years experience, BA, 1/2 MA, music director (parish and school), non-rostered:
Base salary (BA; year 0, see page 3) $ 36,247
Base salary (BA; year 15, see page 3) $ 52,558
5.0% Add for 1/2 MA (see bottom of Salary Schedule, page 3) $ 1,812
8.0% Add for music director (BA; year 0, see page 7) $ 2,900
7.65% Cost of Social Security match $ 4,381
Estimated gross salary for Federal and State income tax $ 57,270
Total cash given as salary $ 57,270
Total cash value equivalent of salary with Social Security match $ 61,651
4) Five years experience, BA, coach, ten-month contract, non-rostered:
Base salary (BA; year 0, see page 3) $ 36,247
Base salary (BA; year 5, see page 3) $ 43,496
0.167 Less adjust for 10-month (BA; year 5 x 1/6th of a year) $ (7,264)
5.0% Add for coach (BA; year 0 x 5%, see page 7) $ 1,812
7.65% Cost of Social Security match $ 2,910
Estimated gross salary for Federal and State income tax $ 38,045
Total cash given as salary $ 38,045
Total cash value equivalent of salary with Social Security match $ 40,955
12EXAMPLES OF DCE, DCO, LAY MINISTER, DEACONESS SALARIES
1) No experience, BA, lay minister, Synod roster, requested housing allowance 38%,
7.65% self-employment assistance:
Base salary (BA; year 0) $ 36,972
4.0% Add for lay minister BA; year 0 x 4% (see page 7) $ 1,479
7.65% Self-employment assistance $ 2,941
38.0% Requested allowance for owned home $ 15,729
For exact amount see Treasurer’s Manual 2.1-2.9
Estimated gross salary for Federal and State income tax $ 25,663
Total cash given which includes worker owned housing % request $ 41,392
Total value equivalent of salary for self-employment tax $ 41,392
2) Thirteen years experience, 1/2 masters, deaconess, on Synod roster, requested housing
allowance 32%, 7.65% self-employment assistance:
Base salary (BA; year 0) $ 36,972
Base salary (BA; year 13) $ 52,131
5.0% Add for 1/2 MA (see bottom of Salary Schedule, page 3) $ 1,849
7.0% Add for deaconess BA; year 0 x 7% (see page 7) $ 2,588
7.65% Self-employment tax assistance $ 4,327
32.0% Requested allowance for owned home $ 19,486
For exact amount see Treasurer’s Manual 2.1-2.9
Estimated gross salary for Federal and State income tax $ 41,409
Total cash given which includes worker owned housing % request $ 60,895
Total value equivalent of salary for self-employment tax $ 60,895
3) Twenty-seven years experience, MA, DCE and youth director - additional responsibilities, on
Synod roster, teacherage provided at 25% of base, self-employment tax assistance:
Base salary (MA; year 0) $ 40,669
Base salary (MA; year 27) $ 63,666
25.0% Teacherage value (25% x year 0) $ 10,167
For exact amount see Treasurer’s Manual 2.1-2.9
Adjusted base salary (MA; year 27) $ 53,499
6.0% Add for DCE (MA; year 0 x 6%,) (see page 7) $ 2,440
8.0% Add for youth director (MA; year 0 x 8%) (see page 7) $ 3,254
7.65% Self-employment assistance $ 5,306
Estimated gross salary for Federal and State income tax $ 64,498
Total cash given plus the value of the teacherage $ 74,666
Total value equivalent of salary for self-employment tax $ 74,666
13Worksheet for Computing Compensation for
Pastors, Teachers, and Other Professional Church Workers
_____________________________________________
Worker’s name
_________________ ____________________________________________
Years of experience Highest degree
Base salary at year 0 ________________
A. Salary determined by
years of experience and degrees $ _______________
B. Compensation for additional responsibilities based on
guidelines for pastors/teachers/other workers $ _______________
C. Reduction based on (see Treasurer’s Manual 2.1-2.115)
Parsonage / teacherage value if appropriate (minus) $ _______________
D. Reduction for 10-month position (minus) $ _______________
E. Other cash compensation — list:
Additional education $ ________________
Home equity program $ ________________
Self-employment allowance $ ________________
____________________ $ ________________
(Other)
Direct accountability of business expenses
and reimbursement (circle one) Yes No
Total other cash compensation $ _______________
F. TOTAL salary cash payment $ _______________
G. Value of benefit package (Concordia Plans, TSA match, etc) $ _______________
H. Value of housing allowance (Line C) $ _______________
TOTAL SALARY and BENEFIT PACKAGE (line F, G, H) $ _______________
14Worker Salary Benefit Information
__________________________________
Name
____________________
Fiscal Year
The following is shared with you so that you will have complete information about your salary
and benefits. Your salary adjustments will begin on ___________. Your check on ___________ will
reflect the change. If you have any questions don’t hesitate to contact _______________________
________________________________________________.
1. Salary (includes years of experience and education level) $ _______________
2. Compensation for additional responsibilities $ _______________
3. Value for parsonage/teacherage provided $ _______________
4. Other cash compensation
____________________________ $_________________
____________________________ $_________________
____________________________ $_________________
Total other compensation $ _______________
5. Total cash salary (Line 1+2-3+4 total other) $ _______________
6. Current cash salary $ _______________
7. Increase %________ (line 5 - line 6 / line 6) $ _______________
8. Value of benefits not included above (Concordia Plans, vacation, etc.) $ _______________
9. Value of parsonage/teacherage (Line 3) $ _______________
Total salary and benefit package: (Lines 5+8+9) $ _______________
15Chapter 2: Housing Allowance and Parsonage
Introduction...................................................100
ELIGIBILITY...........................................................200
HOUSING ALLOWANCE.......................................300
Housing Allowance Income
Tax Aspects..............................................310
Tax-free Limits..................................................320
The Designated Amount...................................321
Use of Housing Allowance................................322
Fair Rental Value...............................................323
“One” Home....................................................330
“Debt-Free” Home...........................................340
Home Equity or Second Mortgage Loans..........350
Home Loan Between Church and Minister........360
Itemized Deductions.........................................370
parsonage.........................................................500
Parsonage Income Tax Aspects.........................510
substantiation and
disclosure.........................................................600
self-employment tax.....................................700
reporting requirements...............................800
sample housing allowance
resolutions......................................................900
Changes in tax law may affect accuracy of text. Copyrighted. All rights reserved. 10/12 • Page 2-12.100: 2.300:
Introduction Housing Allowance
The compensation package of an LCMS minister of A housing allowance neither increases nor decreases the
religion—ordained or commissioned may include a cost of the worker to the congregation. It is a part of
parsonage (that is, the use of church-owned housing), or the worker’s compensation that has been designated as
a housing allowance, or both. housing allowance.
Concerning their treatment for federal income tax Housing allowance may be designated whether the
purposes, the Internal Revenue Code Section 107 states minister lives in a home owned by the congregation, a
the following: rental dwelling, or owns his own home. The amount of
In the case of a minister of the Gospel, gross income allowance may vary with these circumstances.
does not include: If the furnished dwelling is owned by the congre-
1. The rental value of a home furnished to him/her as gation, but the minister pays the cost of the utilities or
part of his/her compensation; or other expenses connected with the home, the employer
2. The rental allowance paid to him/her to rent or may designate part of the minister’s compensation as
provide a home (within certain limits). “parsonage allowance” to cover the cost of the utilities
Granted only to ministers (i.e., licensed, ordained, and other dwelling expenses.
or commissioned in the exercise of their ministry), this Where an employer does not furnish a parsonage
favorable income tax relief dates from the earliest days and the minister rents or provides his or her own home,
of the United States and was a consideration given by the employer may designate an even greater part of
Congress in exchange for the expectation that the clergy his or her compensation as “housing allowance” which
would provide sanctuary for the “deserving poor”— will be used for expenses related to home ownership,
widows and orphans. including furnishings and utilities.
For this publication, references to “housing
allowance” will include all allowances paid to a worker 2.310:
for providing a home. This includes housing allowance, Housing Allowance Income Tax Aspects
utilities allowance and furnishings allowance. The To the extent that a designated housing allowance is
two terms, “housing allowance” and “parsonage,” used to rent or provide a home and does not exceed the
are different and distinctive. They may be provided furnished home’s fair rental value plus utilities, it is not
separately or in combination. Although neither is subject subject to federal income tax. Read 2.320 for a clearer
to income tax, they are subject to self-employment tax. understanding of this statement.
2.200: 2.320:
Tax-free Limits
Eligibility The housing allowance income tax exclusion is limited
Pastors, certified teachers, DCEs, DCOs, deaconesses, to the least of the three following amounts:
parish assistants, certified lay ministers, directors of 1. Amount of the minister’s compensation
parish music and directors of family life ministry who designated as housing allowance, approved by
are listed on the Synod’s roster and are in ministry as de- official action taken by the governing body of the
scribed in paragraph 1.140 are eligible to be compensat- employer, and evidenced in the official minutes of
ed with a housing allowance. Some or all of the housing the governing body.
allowance may be income tax free. These same workers 2. Amount expended or “used” by the minister
are also eligible to be compensated with a parsonage to provide a home during the year and properly
and utilities paid for by the congregation. The fair rental substantiated.
value of the parsonage and paid-for utilities are entirely 3. The fair rental value of the home (including
income tax-free as provided under Internal Revenue garage, etc.), furnished, plus utilities.
Code Sec. 107. A minister’s widow is not eligible for
this tax-free benefit. For retired ministers, see 1.425. As A minister cannot exclude from taxable income any
stated previously, either form of housing provided by the amount of the designated allowance that exceeds the
congregation is subject to self-employment tax. conditions in those “least of” rules outlined here. The
excess taxable housing allowance must be reported by
the minister on his or her IRS Form 1040, line 7.
The sections that follow provide further details
concerning how each of these conditions may be
separately calculated.
Page 2-2 • 10/12 Changes in tax law may affect accuracy of text. Copyrighted. All rights reserved.2.321:
The Designated Amount MINISTER’S ESTIMATE OF EXPENSE
IRS assigns the minister’s employer with the task of
designating how much of his or her salary is believed will ITEM AMOUNT
be used in providing a home. It must be “reasonable” 1. Rent on home $__________
in amount. In other words, the amount cannot be more 2. Garage rental __________
than reasonable pay for a minister’s services. Nor can 3. Down payment; legal,
any portion of the minister’s salary being contributed loan and title fees; and
to a 403(b) TSA also (concurrently) be designated as real estate commission
housing allowance. on purchase of home __________
The designation of the housing allowance must be 4. Mortgage payments
pursuant to official action taken in advance of payment (principal and interest) __________
of the allowance. The designation should be in writing 5. Real estate taxes
to avoid any confusion about its proof, preferably and assessments on home __________
evidenced in the minutes of the appropriate governing 6. Property insurance
body of the employer (e.g., board of directors, church (homeowner’s or renter’s) __________
council, voters’ assembly, etc.). If not done by adoption 7. Utilities:
of a formal resolution, designating the amount as a Gas __________
budget line item may be sufficiently “official.” Electricity __________
The designation cannot be made retroactively. This Water + sewer __________
is extremely important, as ministers have been required Heat __________
to pay taxes and penalties on housing allowances if they Telephone (basic service) __________
could not show proper pre-authorization. Trash pick-up, Environmental fees __________
The designation may take the form of a specific Storm drainage __________
dollar amount (generally based upon the minister’s 8. Furnishing and appliances
estimate of the amount he or she believes will reasonably (purchase and repair) __________
be excludible) or a percent of total compensation. There 9. Structural repairs and
is no suggested percentage by the Synod or a limitation remodeling __________
based on a percentage of compensation by the IRS. 10. Lawn care and landscaping __________
It may be amended from time to time as necessary, 11. Maintenance items
but each amendment must be formally adopted by (household cleansers,
the employer and can only be effective for payments light bulbs, pest control) __________
made after adoption by the appropriate body or voters’ 12. Other allowable expenses
assembly. (specify) __________
13. Home Owner’s Association dues __________
2.322: TOTAL $__________
Use of Housing Allowance
To the extent that the designated housing allowance 2.323:
amount is used to rent or provide a home and does not Fair Rental Value
exceed the furnished home’s fair rental value plus utilities, Currently, IRS has no written procedures concerning the
it may be excluded by the minister of religion—ordained method or frequency for determining this value. In its
or commissioned from income tax. In determining the Audit Technique Guide for Ministers, the IRS tells its agents
amount “used” to rent or provide a home, a minister that determining the fair rental value of a parsonage
may take into account all of his or her payments for “is a question of all facts and circumstances based on
repairs, real estate taxes, mortgage payments (both the local market . . .” It also suggests the importance of
principal and interest), insurance, lawn care, utilities, “documentary evidence.”
furniture, remodeling and other home improvements. Some appraisal experts suggest approximating the
The following worksheet has been designed to as- annual rental value of a home by taking 1 percent of the
sist a minister in estimating his or her total amount of home’s fair market value and multiplying the product
housing expenses. Its inclusion in this publication does by 12. But this calculation doesn’t always yield accurate
not imply that the minister must disclose details of this results—and it doesn’t consider the rental value of a
kind to the governing board that makes the housing furnished home.
allowance designation. The amount a minister of religion The fair rental value of a home is generally the
requests of his or her congregation to pre-designate as amount that houses of comparable size and quality in
housing allowance should consider all the housing al- the same vicinity would rent for in an “arm’s-length”
lowance limitations (for a complete listing, see 2.320). transaction. It’s probably a good idea to contact a local
real-estate agent for help. Real estate agents often
manage rental properties and know their local markets.
Changes in tax law may affect accuracy of text. Copyrighted. All rights reserved. 10/12 • Page 2-3As an alternative, look for relevant classified ads in the designated for housing allowance and home’s fair
newspaper. rental value, then the exclusion is strictly limited to the
And, don’t forget the home’s furnishings. IRS homeowner’s fewer expenses.
hasn’t provided guidance for determining these rental
values, either. However, it may be reasonable to contact 2.350:
furniture-rental agencies for them. Such companies can Home Equity or Second Mortgage Loans
usually quote rates by-the-room. As a homeowner, a minister of religion–ordained or
Finally, document how, when and with whose commissioned may at some time take a second mort-
help you arrived at a fair rental value-and keep that gage or home equity loan on his or her property. The
information for future reference. This amount should be purpose and use of this borrowed money will determine
reviewed regularly and reasonably adjusted for changes. whether or not the payments can be considered “uses”
In complicated situations, seek the advice of a qualified of his or her housing allowance. If the borrowed funds
tax professional. were used to pay for home repairs, maintenance, or
furnishings, payments (including principal and interest)
2.330: will be considered a use of housing allowance. If they
“One” Home were partially used for another purpose (i.e., credit card
There is another long-standing restriction IRS has debt, personal loans, education, etc.) you must prorate
imposed on the excludible portion of a minister’s payments between housing and personal expenses.
compensation received for housing, confirmed by the
court. A minister of religion—ordained or commissioned 2.360:
can only exclude from gross income his or her housing Home Loan Between Church and Minister
allowance used in providing only “one” home. Congregations may elect to assist a minister with
Generally, that home was the primary residence. the purchase of a home by means of a direct loan.
Forgiveness of debt or interest free loans could result in
additional income for the worker (see 1.310).
2.340: The congregation is required to report the interest
“Debt-Free” Home payments made by the minister on Form 1098 (Exhibit
As a matter of interest to ministers of religion--ordained 2). The Form 1098 must also be submitted to the IRS
or commissioned who own their home debt-free, they with a Form 1096 (see Exhibit 7-R). The box for Form
are usually not able to exclude as much of a housing 1098 must be checked on the Form 1096.
allowance as those who own their homes subject to a Principal and interest payments made by the
debt. The reason, of course, is that they are not making minister may be a qualified use of housing allowance as
principal and interest mortgage payments. Even though provided in this chapter.
the fair rental value of the home may have appreciated, A home or former parsonage being purchased by
the “least of” rule limiting the tax-free portion of a minister is usually not exempt from property tax.
housing allowance (see 2.320) still applies. So when Check the applicable laws in your state.
expenses on a debt-free home drop below the amount
Exhibit 2
Page 2-4 • 10/12 Changes in tax law may affect accuracy of text. Copyrighted. All rights reserved.2.370: minister document when and how he/she determined
Itemized Deductions his or her home’s annual fair rental value, furnished.
Although mortgage interest and real estate taxes are If the congregation owns the dwelling, the employer
generally a housing allowance use that is excluded from and minister should openly discuss and agree on
the minister’s gross income for income tax purposes, determining that amount. See how the amount might
he or she may also claim deductions for the same if be determined at 2.323.
itemizing them on his or her tax return. This example As another practical matter, the minister should
of “double dipping” is a matter of law and another also ask for and keep a copy of his or her housing
special tax benefit to ministers of religion–ordained or allowance designation. The designation may appear in
commissioned. the minister’s call documents, employment contract,
the church minutes, the church budget, or any other
document indicating official action. Having a copy in-
hand helps to reassure the minister that this action was
2.500: actually taken by his or her employer.
If the IRS suspects that a taxpayer has omitted a
Parsonage substantial (25 percent or more) amount of income on
Where an employer furnishes a minister of religion–
his or her tax return, the Service has up to six years to
ordained or commissioned with a dwelling, a
audit and assess an additional tax. However, an item
parsonage, the fair rental value of the housing,
is not considered omitted if its existence has been
including any employer-paid utilities, is not part of
disclosed in the return, or in a statement attached to the
the taxable compensation for income tax purposes.
return, in a manner that apprises the IRS of the nature
The same applies to the furniture, garage, repairs and
and amount of the item. Since a minister’s housing
maintenance, if furnished by the employer. (Note: The
allowance (or annual fair rental value of a parsonage) is
home’s fair rental value and utility expenses paid for by the
likely to be a substantial portion of a minister’s income, it
employer are included in income for self-employment tax
is recommended that he or she disclose having received
computation.)
the earnings and explain its excludible nature. A Form
W-2 showing the nature of the income and excludible
2.510: amount in Box 14 will probably be sufficient in meeting
Parsonage Income Tax Aspects this disclosure requirement and thus avoid the six-year
Unlike with housing allowance, there are no limitations statute of limitations. However, some employers may
with respect to the employer-provided housing that not show that information in this manner. In that case,
is excludible from the minister’s gross income for the minister should consider preparing a statement
income tax purposes. Plainly speaking, 100 percent of a with this information himself and attach it to the return.
parsonage’s value is income tax-free. However, IRS could Otherwise, he or she should keep all housing allowance
assess the congregation’s officers and the minister both and/or parsonage information related to a tax return for
with severe monetary penalties (intermediate sanctions) six years after the return’s due date.
if the value of the housing in combination with his or her
salary is highly unreasonable compensation for his or her
services.
2.700:
Self-Employment Tax
2.600: Although neither the minister’s excludible housing allow-
ance or employer-provided housing is subject to income
Substantiation tax, they are subject to self-employment tax. For this
reason, it’s important to communicate these amounts to
and Disclosure the minister. The section that follows describes how this
Whether a minister of religion–ordained or commis-
information should be reported. The reported value has
sioned is provided with a parsonage or receives a hous-
no relationship to the 25 percent allocation for a person
ing allowance as part of his or her earnings, he or she
living in church-supplied housing used by Concordia
must understand there are certain substantiation and
Plan Services for benefit computation. In order to report
disclosure requirements that must be followed to ensure
an accurate amount of employer-furnished housing, it is
their income tax benefit.
important to have the home’s fair rental value assessed
In order to exclude any amount of the housing
(see 2.323). Also, keep a record of any utility payments
allowance, proof of housing-related expenditures in the
made with respect to the property. IRS expects that the
form of receipts or cancelled checks should be retained
amount reported is a figure “agreed on” by the church
by the minister. IRS does not require this information to
and minister and that documentary evidence in this
be shared with the employer.
regard exists.
In addition to substantiating how the housing
allowance was used, it is also recommended that the
Changes in tax law may affect accuracy of text. Copyrighted. All rights reserved. 10/12 • Page 2-52.800: congregation thoroughly understands the rules ap-
plicable to designating one before its adoption (refer
Reporting Requirements to 2.321, The Designated Amount). Although each is
There are various ways the housing allowance of the written in “standing” form, the congregation could
minister of religion–ordained or commissioned may be adopt one annually to reflect revised requests for hous-
reported for tax purposes. Two common ways are listed ing allowance amounts by the minister. Congregations
as follows: should recognize the needed amounts for housing
1. “Estimated Exclusion Method” allowance will vary greatly among their eligible workers.
Generally the most commonly used method by Therefore, sample resolutions 1, 3 and 4 will assure the
congregations of The Lutheran Church—Missouri most favorable tax treatment for their workers.
Synod, it requires the least amount of congregational
involvement in determining what portion of the Sample 1
minister’s designated housing allowance is actually All Employed Ministers—Stated Dollar Amount
excludible from federal income tax. Before the begin- RESOLUTION
ning of the year, the minister presents the governing RESOLVED, that (name of congregation), authorizes and
body with an estimated amount of his or her housing establishes the following individual(s) housing allowance
allowance needs (refer to 2.322 for an understand- for the year 20xx:
ing how a minister might estimate this amount). The Name_________________________ Amount___________
church board adopts a resolution designating the Name_________________________ Amount___________
housing allowance based on that estimate. At year- The housing allowance will be paid from ____________,
end, the treasurer prepares the W-2 by reporting the 20xx, to December 31, 20xx.
net salary (gross salary less housing allowance) in Box
1 and the housing allowance in Box 14 or on a sepa- Sample 2
rate statement. The minister then considers the “least All Employed Ministers—Stated Percentage
of” rule shown in 2.320 and reports any unused RESOLUTION
housing allowance on his or her Form 1040, line 7. RESOLVED, that (name of congregation), as a standing
resolution to remain in force and effect until such
2. Before the beginning of the year, the governing body time as amended or revoked, hereby authorizes and
may designate the housing allowance as a reasonable establishes a housing allowance for each ordained or
stated percentage of compensation in lieu of the commissioned minister of religion at any time serving it
minister’s estimation. At year-end, the treasurer in an amount each year equal to _________ percent of
tests to ensure the amount of gross salary being that person’s gross annual compensation. (Congregation
excluded as housing allowance on the minister’s should designate what is included in gross annual
wage statement is consistent with the congregation’s compensation.)
designation (gross salary multiplied by the stated
percent). The treasurer and minister then follow the Sample 3
same IRS-reporting procedures as described under Individual Minister—Stated Dollar Amount
method 1. RESOLUTION
According to IRS Publication 15-A, the rental value RESOLVED, that (name of congregation), as a standing
of housing provided to a minister may be reported to resolution to remain in force and effect until such time
him or her on a separate statement or in box 14 on as amended or revoked, hereby authorizes and estab-
Form W-2. In this regard, do not mistakenly label this lishes a housing allowance for (individual’s name) at any
amount as a “housing allowance” as that may cause the time serving it in the amount of $__________ per year.
minister to improperly calculate his or her income tax
liability. Report only the amount agreed upon between Sample 4
you and the minister. See 2.323 for guidance concern- Individual Minister—Stated Percentage
ing how that amount might be determined. The report- RESOLUTION
ed value has no relationship to the 25 percent allocation RESOLVED, that (name of congregation), as a standing
for a person living in church-supplied housing used by resolution to remain in force and effect until such
Concordia Plan Services for benefit computation. time as amended or revoked, hereby authorizes and
establishes a housing allowance for (individual’s
name) for the duration of service in an amount each
2.900: year equal to _______ percent of that person’s annual
compensation.
Sample Housing
Allowance Resolutions
This section contains sample resolutions that may be
used by a congregation in setting the housing allow-
ance for minister employees. However, make sure the
Page 2-6 • 10/12 Changes in tax law may affect accuracy of text. Copyrighted. All rights reserved.You can also read
