Pastor's Reduction in Wages

I have been made aware of some of these laws and my church is considering reducing my wages because of the percentage of wages per income of the church rule.

In doing this, will it cause me or the church problems with the SSA or IRS?

Everything has been recorded properly, i.e., wages, housing allowance, etc., but we were unaware of this ruling as to percentage of the income to wages thing.

Comments for Pastor's Reduction in Wages

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Feb 22, 2017
Percentage of Budget for Salary
by: Vickey

I am unaware of any rule or law that states wages have to be a percentage of income.

You do have to watch for "private inurement"...

see this page:
https://www.freechurchaccounting.com/excessive-benefits.html

...but be aware that smaller churches have to spend a large portion of their budget on the pastor's compensation...

as long as that compensation is "average compensation" of other pastors in the area...with churches of the same size.

Feb 23, 2017
Average wages
by: Anonymous

Thank you for the answer Vicky. We were told that the wages had to be 40% of the churches annual income. But the final statement in your answer better addressed my question. How is one supposed to know what the average is for wages of a pastor in the community based on the size of the church? That sounds like private info to me. Since churches don't have to file any kind of tax reports how does one know this average for your community.

Feb 24, 2017
Compensation Handbook
by: Vickey

Get Richard Hammar's Compensation Handbook:

http://store.churchlawtodaystore.com/20cohaforchs.html

P.S. Don't believe everything you hear from...some church tax conference ( I know one in particular that uses non and half truths and scare tactics to get you to buy their products), online, and even some CPAs that are not completely familiar with churches and minister issues.

Research everything diligently and pray about it!

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