Updated: May 3, 2020
by GuideStone staff, posted Friday, March 27, 2020
DALLAS (BP) -- The COVID-19 Pandemic Phase III Stimulus Package signed into law today (March 27) by President Trump will provide potential relief for churches and pastors, thanks to efforts by the Church Alliance, a national coalition of large and historic church benefit boards, including GuideStone, and Southern Baptist partners to ensure churches and pastors have the same options as small businesses and self-employed individuals attempting to financially weather the economic turmoil wrought by COVID-19.
"Churches and pastors have options available to them depending on their own situations and convictions," GuideStone President O.S. Hawkins said. "While we would never tell a pastor what he must do, it is good that the options are available for pastors and churches who may wish to avail themselves of the options available through this legislation."
Like other taxpayers, pastors will be eligible to receive a rebate up to $1,200 ($2,400 if married), plus $500 per child. Those amounts are reduced for certain higher-income taxpayers. Additionally, unemployment benefits, usually not available to church or ministry employees, may be available under certain circumstances.
GuideStone's legal team, led by Chief Legal Officer Harold R. Loftin, created the following Question-and-Answer document to provide general information on the new law signed Friday (March 27). The answers offered below are based on a reading of the statute and in many areas, additional guidance from the IRS or other administrative agencies may be issued in the future that may cause these answers to change. Since every taxpayer's situation is unique, it is recommended that individuals consult with an accountant or attorney familiar with the unique status of ministers' taxes before taking action.
Questions and answers follow:
I. Questions and Answers concerning the recovery rebate.
As a pastor or an employee of a ministry, am I eligible for a recovery rebate? If you are a U.S. resident with adjusted gross income under $75,000 ($112,500 for head of household and $150,000 married), are not the dependent of another taxpayer and have a work-eligible Social Security Number ("SSN"), you are eligible for the full $1,200 ($2,400 married) rebate. If you have children, you are also eligible for an additional $500 per child.
What if I earned more than $75,000 ($112,500 for head of household and $150,000 married)? Am I eligible for any rebate? Yes, depending on how much you earned over these amounts. The rebate amount is reduced by $5 for each $100 your income exceeds the phase-out threshold. The amount is completely phased-out if your income exceeded $99,000, $146,500 for head of household filers with one child, and $198,000 for married couples with no children. For a typical family of four, the amount is completely phased out for those with incomes exceeding $218,000.
What if my income was above the threshold in 2019, but I've lost my job due to the coronavirus? Can I still get a rebate check? Yes, if your income in 2019 was in the phase-out range you would still receive a partial rebate based on your 2019 tax return. Since the rebate is an advance on a tax credit that you may claim on your 2020 tax return, any additional credit you are eligible for will be refunded or reduce your tax liability when you file your 2020 tax return next year, assuming your income is lower in 2020 than in 2019.
Is the rebate taxable or will I have to pay back any amount? No, the rebate is not considered income.
Who qualifies as a child for purposes of the rebate? Any child who is a qualifying child for the purposes of the Child Tax Credit is also a qualifying child for the purposes of the recovery rebate. In general, a child is any dependent of a taxpayer under the age of 17.
Do dependents other than children under 17 qualify a taxpayer for an additional $500 per dependent? No, the additional $500 per child is limited to children under 17.
If I have little to no income or receive federal benefits, such as SSI, am I still eligible for a recovery rebate? Yes, there is no qualifying income requirement. Even individuals with $0 of income are eligible for a rebate if they are not the dependent of another taxpayer and have a work-eligible SSN.
As a pastor I opted out of Social Security years ago. Am I eligible for a recovery rebate? Yes, as long as you are not the dependent of another taxpayer and have a work-eligible SSN.
I am retired and my only income is from Social Security, my 403(b) account at GuideStone and/or I receive an annuity form of benefit from GuideStone. Am I eligible for the recovery rebate? Yes, if you are not the dependent of another taxpayer. Seniors are still encouraged to file their 2019 tax return to ensure they receive their recovery rebate as quickly as possible.
Are my college-aged children eligible for a recovery rebate? Only if they are not considered your dependent. Generally, a full-time college student under the age of 24 is considered a dependent if their parent(s) provide more than half of their support.