Clergy Finances: Unemployment Benefits for Pastors

The nation’s unemployment rate is a hot topic. Regardless of what profession or industry one works in, there is always the chance for losing one’s job. This scenario is no different for church pastors. They may find themselves without a job due to the economy, changes within their church or for a variety of other reasons. The difference when it comes to clergy finances is that if pastors find themselves out of work they are rarely eligible for unemployment benefits.

Churches and other religious organizations are exempt from participating in a majority of state unemployment programs. Therefore, since they don’t make contributions to their state’s unemployment insurance, they are also unable to collect those same unemployment benefits.

In 1970 the Unemployment Tax Act of 1935 was amended in that religious organizations were exempt from the requirement of paying unemployment taxes. Even though they aren’t required to participate in the unemployment insurance program, some still choose to do so even if that means establishing an agreement to reimburse their state’s unemployment insurance fund for any benefits paid to former employees. Furthermore, if a church has paid unemployment benefits or has some other agreement with your state’s unemployment condition, a pastor may still be eligible for unemployment benefits. 

When it comes to minister taxes, a full-time pastor usually isn’t eligible for unemployment benefits unless the church has paid unemployment taxes or has some sort of agreement with their state’s unemployment insurance fund. If a pastor also has worked at an additional part time or full time job while also being a pastor, they may be able to gather unemployment based on those jobs.

If a pastor does find themselves without a job and/or an additional part time job through which they can receive unemployment benefits, there are still options available and should check with clergy tax services professionals. Some churches offer severance packages in lieu of employment benefits. As mentioned earlier, churches can create agreements with the state’s unemployment office in which the church pays the unemployment office for all benefits paid to the pastor, or ask that they pay their pastor the equivalent of what they would have collected in unemployment as a settlement. Churches may also offer financial aid but law does not require churches to provide unemployment packages to former pastors.

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Sarah Wozniak

Staff Writer, Page1 Online Marketing