Types of Compensation Examined in Non-Profit Reasonable Compensation

Issues raised by exempt compensation: A. Inurement, B. private benefit, C. self-dealing, D. other factors of reasonableness. When evaluating an exempt's organizations employee's compensation and all forms of compensation paid must be included in its analysis. Below for the purpose of this conversation compensation includes at least the following: 1. salaries and wages, 2.Contribution to a pension and profit-sharing plan, 3. unpaid deferred compensation, 4. payment of personal expenses, 5. Rents royalties and fees, 6. Personal use of property and facilities. The gross income of a licensed commissioned and ordained minister does not include the fair rental value of a home, or a housing allowance paid, as a part of the minister's compensation for services performed that ordinarily the duties of the minister. A minister who was furnished a Parsonage may exclude from income the fair rental value of the Parsonage, including utilities, however, under these circumstances the amount excluded cannot be more than the reasonable pay for the minister services. If the minister owns the home, you may still claim deductions for mortgage interest and real property taxes period if your housing allowance exceeds the lesser of your reasonable salary, the fair rental value of the home, or your actual expenses, you must include the amount of the excess as other income. A minister who receives a housing allowance may exclude the following gross income to the extent it is used to pay expenses and providing a home. Generally, those expenses include rent, mortgage, utilities, repairs, and other expenses directly relating to providing a home the amount excluded cannot be more than the reasonable pay for the minister's services. ~Dr. Damien S. Fields, President & CEO, HME Consulting, Inc.