January 29, 2011

Payments to Widow of Former Pastor

Question 1:

A church's pastor passed away in 2010. In recognition of his years of past service, the church continued his salary payable to his wife for a short time. Does a Form 1099-MISC need to be issued for that amount?

Answer 1:

The compensation is reportable in the same manner as was the former pastor's -- typically on Form W-2. However, the widow is not eligible for a non-taxable housing allowance designation (Revenue Ruling 72-249).

Question 2:

The church also had agreed to pay health care expenses for the former pastor's wife for an indefinite period. Does that amount need to be reported as well?

Answer 2:

"Contributions by an employer to a health and accident plan, which was adopted during the employee’s employment and continues to provide benefits to the spouse and dependents after the employee’s death, are excludable from gross income under section 106 of the Code" (Revenue Ruling 82-196).

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