The pastor of a small church is furthering his education while fulfilling his duties as a minister. He wishes to complete a master's degree to improve his knowledge and abilities as a Christian leader. If the church pays the university for its pastor's master's degree, is the benefit taxable income to him?
- The program benefits employees who qualify under set rules that don't favor highly compensated employees. (For a church, essentially, "highly compensated" doesn't apply if total compensation does not exceed $125,000.)
- The program doesn't provide more than 5% of its benefits to shareholders or owners (of which, of course, churches have none).
- The program doesn't allow employees to receive cash or other benefits instead of educational assistance.
- Eligible employees are given reasonable notice of the program.