Q: I have a question regarding the stimulus package. In your video, you mentioned that people who once didn’t qualify for unemployment now do through the new stimulus guidelines. Does that include clergy working for churches? Thank you for your time.
A: Thanks for your question. It’s a good one. And I hope you’ll be happy with the answer, which is YES.
Under the $2 trillion CARES Act, clergy members are eligible for a host of these new federal benefits, including ongoing unemployment compensation for up to 39 weeks, and the one-time $1,200 per adult cash payment, known as an Economic Impact Payment or stimulus check.
Furthermore, those who work for or operate churches, faith-based organizations and non-profits can also seek forgivable loans, as well as $10,000 grants from the U.S. Small Business Administration (SBA).
All of this financial assistance is available to the following clergy members and ministry staff under the CARES Act.
- church ministers
- imams; and
- others who work as part-time or full-time employees or independent contractors of faith-based organizations or non-profits
Here are some more specifics and details you need to know regarding aid to clergy.
Unemployment pay varies by state, but the average state benefit is roughly $380 per week.
Fortunately, the CARES Act provides an extra $600 a week in federal unemployment compensation – on top of the state benefit. So the typical jobless person in America – who’s been laid off, furloughed, or who has reduced work hours – can now get nearly $1,000 a week in unemployment benefits.
Note, however, that the CARES Act does include one thorny provision of which everyone should be aware. The Act specifically states that “an individual who has the ability to telework with pay” is NOT eligible for unemployment pay.
This rule may initially sound horrible, as if it automatically disqualifies a ton of people from getting their rightful unemployment benefits — especially since most folks who still have jobs are, in fact, “teleworking.”
But let’s look at the full picture and all of the CARES Act rules surrounding unemployment compensation.
My interpretation is that this specific guideline refers to someone who can telework or work remotely and still receive their same, full pay.
Naturally, a person working from home at full pay isn’t considered “unemployed” and wouldn’t qualify for unemployment benefits – because he or she is still getting their regular salary or their normal paycheck.
Guidance For Those Working Remotely
But what if you’re teleworking (either working remotely or working from home) because of COVID-19, and you have reduced work hours or reduced pay?
This wouldn’t be an uncommon scenario for many clergy members. A growing number churches and houses of worship have gone digital, and now use streaming platforms and online tools to broadcast services and reach their congregations.
Well, notwithstanding the guidance about teleworking, the CARES Act is also clear that people who qualify for unemployment include:
- those whose workplace has been shut down because of the coronavirus public health emergency; and
- individuals whose income or work hours have been reduced by COVID-19
It’s these later two guidelines that should ultimately determine a person’s eligibility for unemployment insurance.
So regardless of whether you’re working remotely, I would still encourage anyone who has reduced hours or reduced pay to apply for unemployment benefits.
Economic Impact Payments AKA Stimulus Checks
Now what about those $1,200 so-called stimulus checks?
This money is intended to provide millions of Americans with some basic financial relief from the COVID-19 emergency. After all, the coronavirus pandemic has triggered huge economic stress by forcing the shutdown of millions of businesses, non-profits, faith-based entities and other organizations across the United States.
Like most other Americans, members of the clergy are eligible for the $1,200 stimulus payment, as long as they’ve filed their 2019 or 2018 income taxes, and their annual earnings are less than $75,000 for an individual or $150,000 if they are married and filed a joint return.
Hopefully that $1,200 check will help you or someone you know.
Just be aware that the $1,200 payment is also prorated based on income.
So an individual earning above $75,000 up to $99,000 per year will get some money; but it just won’t be the full $1,200. Likewise, couples making above $150,000 up to as much as $198,000 annually can still qualify for a pro-rated stimulus check; but it won’t be the full $2,400.
Adults who receive a stimulus check, and who have a child age 16 and under, will also get $500 for each child they’ve claimed on their tax returns.
Small Business Loans and Grants
The Small Business Administration is awarding nearly $350 billion in forgivable SBA loans and grants to help battle the economic downturn resulting from the coronavirus outbreak.
Under temporary emergency measures, the CARES Act also makes churches and other non-profits eligible for these SBA funds.
Two programs include:
- The Paycheck Protection Program – this forgivable loan program offers so-called PPP loans of up to $10 million in size. A PPP loan is designed to help organizations keep employees on the payroll through June 30, 2020.
- The Economic Injury Disaster Loan – this offering, sometimes called an EIDL, allows borrowers to obtain up to $2 million in SBA loans. The program includes an emergency grant of up to $10,000, which is yours to keep – even if your disaster loan application is ultimately denied.
Keeping Up With New and Evolving IRS Rules
A final related tip: under federal law, clergy members are taxed differently than secular employees.
As a result, financial and tax issues can be somewhat complicated for various members of the clergy. Even the very definition of “clergy” can get tricky.
For example, only ordained, licensed or commissioned clergy are eligible for certain long-standing tax breaks. One of them, called the Housing Allowance, is a great tax benefit clergy can use to lower their taxes, by exempting a portion of their wages from income taxes.
By contrast, other “ministerial staff” such as church custodians, secretaries, or student and intern clergy are not eligible for the housing allowance.
I know that may not seem fair, but that’s current law. So even if you call someone “minister” or “clergy,” recognize that the IRS may not treat the person as such for tax purposes.
For all these reasons and more, it’s important to keep on top of the regular or traditional IRS rules that apply to those involved, as well as the new rules that are now in force (and even evolving) due to the coronavirus crisis.
To help you understand what’s normally the case, and to stay abreast of any new guidance, I would point you in the direction of the IRS, which is the (earthly) authority on these matters.
According to the IRS, members of the clergy receive a Form W-2 but do not have social security or Medicare taxes withheld. Instead, they must pay social security and Medicare by filing Form 1040 (Schedule SE), Self-Employment Tax.
So be sure to check out IRS Publication 517, which offers a lot more information and official guidance about tax matters for clergy members.
Here’s a link to the publication:
Again, I hope all this info helps … and good luck!