Compensating Musicians Legally

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Can we create a designated account to supplement an employee's pay?

Vonna Laue responds in our Ask the Experts discussion.

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Compensation, Employees, Finance, Payment

Posted:

3/09/2010

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Question:
Due to the difficult financial times we are in, we have had to scale back, or drop completely, many items in our budget. In the past, our accompanists have been paid per service, but we are no longer able to provide as much as in previous years. Is it legal to set up a 'Designated Account' for this? Is this a tax deductible donation?

Answer:
The church can raise funds for the music ministry and those would be tax deductible. However, the accompanists should still have a set compensation for their services. It is unlikely they would fall into a similar category as support raising missionaries so you couldn't just pay them whatever they raise in contributions. If the funding doesn't come in, you would need to support the payments through the general fund or discontinue paying for the service. If individuals wanted to give money specifically for an accompanist, the funds would not be tax deductible. To learn more about compensation planning, see the 2010-2011 Compensation Handbook for Church Staff, and for comprehensive information on designated funds, see Richard Hammar's 2010 Church & Clergy Tax Guide.

Posted: August 06, 2010

titus2

(Guest)

we have aretired ordained pastor who is our contract missionary assigned in our international mission foeld now. can he have any tax benefit eg,. housing allowance etc when he file for 1099? This is the first time I send in any respnd comment. How do I retrieve your reply?

Posted: August 06, 2010

Titus 2 Mom

(Guest)

We have a retired ordained pastor who is now our contract missionary assigned in our international mission field. can he have any tax benefit eg. housing allowance like our ordained pastors as he file for 1099? This the 1st time I send a respond. How do I retrieve your respond?

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