Tax exempt status

by William
(Maryland)

A church member occupies the parsonage for a fee. This fee is reduced with an agreement to perform duties at the church before and after church hours. Does this affect the church tax exempt status?

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Mar 05, 2016
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Parsonage use
by: Anonymous

A member rents the parsonage for $1000 per month, but this amount is reduced by $400 for duties he performs for the church, i.e. Opening up/locking up of church daily. Does this require a need for a W2 at year end? Or can we just word the lease rent cost of $600 which includes opening and closing of church daily? Thank you for your help with these questions.

Feb 27, 2016
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parsonage rental
by: Anonymous

There are not two checks involved. The member pays the church #1000 for rental which is reduced by $400 for the duties he performs at the church. I understand that this is does not effect the exempt status of the church, but does this constitute the need for a W2 statement for his duties?

Feb 24, 2016
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Tax exempt status
by: Lewis in NC

No that is not the understanding that I had in my response. I was answering with the understanding that the fee being charged for the rent of the parsonage was being reduced by the value of services rendered. If two checks are being exchanged in the transaction, it could be much more complicated than that. If that is the case a call to the IRS toll free number might be helpful. Sorry for any confusion to the writer of the original question.

Feb 24, 2016
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Tax Exempt Status
by: Anonymous

Do I understand correctly that if the church member is paying $1000 per month rent and the value of the duties he is performing is $1000 there is no income to be reported on a W2?

Feb 20, 2016
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Tax exempt status
by: Lewis in NC

This does not change the tax exempt status of the church, but does have tax implications for the church.

A church member does not qualify for income exclusions for using the parsonage, so the church must determine the income value provided to this member to report this income value given to this member on a W-2.

It sounds to me like the church is hiring this member to perform a service for the church using the value of an unused parsonage by qualifying clergy. The value of this parsonage to the non-qualifying member living in it is the fair market rental value of it less the fair market value of the services being provided to the church by this church member. If the value being provided to the member is equal to the value being given back to the church with his services, then there would be no income value to him to report on a W-2. Hope this is understandable to you.

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