A designated housing allowance for evangelists can be part of a guest speaker’s compensation. It should be designated in advance and handled correctly, but can be a nice tax benefit for your traveling evangelists.
According to IRS Rev. Rul. 64-326, a minister may exclude rental allowances paid by several churches, to the extent used to maintain a permanent home (minister performed evangelistic services at churches away from home).
There are a few conditions that must be met before your church considers designating a housing allowance for evangelists.
The evangelist must:
Section 107 of the Internal Revenue Code allows ministers of the gospel to exclude ...
"the rental value of a home furnished to him as part of his compensation; or (2) the rental allowance paid to him as part of his compensation, to the extent used by him to rent or provide a home and to the extent such allowance does not exceed the fair rental value of the home, including furnishings and appurtenances such as a garage, plus the cost of utilities" ...
from their gross ministerial income as long as it was properly designated by a church as a rental or housing allowance. See more on housing allowances.
According to Charitableplanning.com: "The term 'rental allowance' means an amount paid to a minister to rent or otherwise provide a home if such amount is designated as rental allowance pursuant to official action taken in advance of such payment by the employing church.
Section 107 of the Code and section 1.107-1 of the regulations use the term `home' in its ordinary meaning of a dwelling place. There is no requirement in either the Code or the regulations that a minister's `home' be near the area where he conducts his services, or that a minister must have a specific home charge or church to qualify for the rental allowance exclusion."
The same rules apply to evangelist that applies to home ministers and are spelled out in my housing allowance page. Rental (housing) allowance payments from employing churches may be excluded from qualifying ministers'and evangelists' gross ministerial income to the extent used to maintain their homes.
Note: If the evangelist has established his ministry as a corporate entity and the speaking engagement payments are made out to the corporation, the corporation itself can designated a proper rental (housing) allowance, but the visiting churches would not and could not designate any of the amount as a rental allowance.
1. If the evangelist meets the eligibility criteria, then the paying church may officially designate part or all of their love offering, honorarium, speaking engagement fee, etc. as a rental or housing allowance for evangelists BEFORE the they preach or speak at the visiting church.
This can be done by the board approving a resolution stating the minister's name and the amount approved for the speaking engagement and the portion designated as a rental (housing) allowance.
There is a wonderful sample resolution for a Housing Allowance for a Evangelist on Hartley Tax Accounting's website. There are several more sample resolutions on that page. Kudos to that organization for providing those samples free of charge for churches and ministries!
2. A statement signed by an authorized officer of the church designating a portion of the payment as a "rental or housing allowance for evangelists" should be included with the check issued for payment for the minister's services.
3. At the appropriate time, your church will be required to issue a 1099-MISC to guest speakers and evangelists for payments of $600 or more in a calendar year. According to Dan Busby's book: Minister's Tax & Financial Guide, the $600 reporting threshold is after excluding any properly designated housing allowances for evangelists and net of expense reimbursements based on adequate substantiation.
Remember that when filing the 1099 form, the taxable amount listed in box 7 would be the total amount paid less the amount designated and approved as a rental (housing) allowance. There is no place on a 1099 for rental allowance payments!
Note: Even though the amount paid as the housing allowance for evangelists should not be reported on the 1099 form, your church should provide a separate letter to the evangelist that identifies the amount of the housing allowance not included on the 1099.
In addition to and even if you do not designate a portion of a guest speaker's payment as a rental housing allowance for evangelists, you should have a Payment of Guest Speakers Policy in your Church's Policy and Procedures Manual.
Sandi, a wonderful and generous reader, has shared many of her own church's policies as examples. See more of her shared policies on this page: Creating an Accounting Policy Manual
This is her Payment of Guest Speakers Policy:
A council approved Guest Speakers will be given payment for service of $150.00 per speaking engagement. Mileage may or may not be authorized. Non-council approved speakers may or may not be given payment.
• If mileage and/or lodging are authorized payments will be made in compliance with the travel policy.
• Mileage to be paid in compliance with the travel policy only for distances over 50 miles (round trip).
• If authorized $ .35 cent per mile will be paid.
• If an overnight stay is required and authorized, the church will make arrangements for a host family or pay for local accommodations.
• When a pulpit swap is conducted, only authorized mileage will be paid to ABC Church Pastor, visiting pastor will be paid by their home church.
• Council invited Pastor Candidates will have no mileage limit and payments will be made in compliance with the travel policy.
Offerings taken for guest speakers will be applied to authorized amount in order to defray costs, if offerings do not meet the authorized amount the general fund will make up the difference.
If offering exceeds the authorized amount the excess will be added to the general fund account.
To be reviewed annually Approved: ________________ Date:
Dan Busby's book: Minister's Tax & Financial Guide