Some kinds of income are not taxable. These items are called exclusions. Most exclusions apply in computing both income taxes and self-employment taxes. The minister s housing allowance is an example of an exclusion that applies only to income taxes, and not to self-employment taxes. However, employers generally are not permitted to give tax-free gifts to employees such as a love offering from the church to the minister.
Life insurance proceeds and inheritances.
The payments can be made on behalf of a spouse or dependent of the employee. Unfortunately, the requirements for such a plan are not specified in the Tax Code. However, if reimbursements are made under a self-insured plan, then nondiscrimination rules apply. Generally, these rules require that the plan not discriminate in favor of highly compensated individuals with regard to either amount of benefits or eligibility to participate. Special rules apply if the employee pays some or all of the dependent coverage with after-tax dollars.