Church payments on the educational loans for a pastor are just another form of compensation, fully taxable for income and social security tax purposes. Compensation should be reported to the minister based on the amount of the loan forgiven in a calendar year. However, payments or reimbursements for other types of life insurance represent taxable income. Too often, a church treasurer is asked to reimburse the pastor's expenses without adequate documentation. This places the treasurer in a very awkward position.
Integrity requires consistent and thorough documentation of expenses.
Taxpayers are cautioned that this article is written with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. You should seek the professional advice of a tax accountant, lawyer, or preparer for specific tax questions.