A youth minister and his wife live in the church parsonage where the wife runs a home photography business. Does this business put the church at risk of losing its exempt status? How can we limit that risk?
Perhaps a good place to start is to quickly review the aspects of tax-exempt status. Exempt organizations typically enjoy the following benefits:
- No federal or state income tax on the excess of receipts over disbursements
- Donors to these organizations receive tax benefits for their contributions
- Real property owned by the entities are not subject to real estate taxes
- Purchases of personal property are exempt from sales tax
- Employee compensation is not subject to federal or state unemployment taxes