We have someone on staff we call our pastor of education, but some members on our board aren’t sure she qualifies as a minister when reporting income taxes. How can we know for sure?
In deciding if a person is a minister for federal income tax reporting, the following five factors must be considered:
- ordained, commissioned, or licensed status (required);
- administration of sacraments;
- conduct of religious worship;
- management responsibilities in the local church or a parent denomination; and
- whether the person is considered a religious leader by the church or parent denomination.
In general, the IRS and the courts require that a minister be ordained, commissioned, or licensed, and then they apply a "balancing test" with respect to the other four factors. The more of those factors that a person satisfies, the more likely he or she will be deemed a minister for tax reporting.
Adapted from the annual Church & Clergy Tax Guide.