Clergy, This May Be My Best Tip Yet!

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In the new tax plan included in the “One, Big, Beautiful Bill,” there was a provision that the IRS would not tax workers’ overtime pay (actually, the overtime bonus) and their tips. As I planned the recent Clergy Tax webinar, I mentioned this and teased my clergy sisters and brothers by saying, “You don’t get paid for overtime, and you don’t get tips! I’m sorry!”

At the end of the webinar, one participant asked whether getting money for weddings and funerals was like getting tips. My immediate response was that I wouldn’t consider what we call honoraria (traditionally recognized as income that must be reported) to be tips. I think doing so might draw undesirable attention to a clergyperson’s tax return.

Imagine my surprise when this well-informed participant shared the following link to a document on the official IRS website: “List of Occupations that Received Tips.” If you scroll down to line 505, you might be as flabbergasted as I was...

Money received from officiating at weddings or funerals is viewed by the IRS as tips.

After almost forty-five years of ordained ministry, I am struggling with the idea that what I offered to hundreds of families in times of joy and times of sorrow, leading services of Marriage and Services of Death and Resurrection, was responded to by these families with tips. That just feels weird to me.

Regardless of how you or I feel about it, the IRS considers honoraria in this category, and receiving a financial gift after officiating at these services can be reported this way without being taxable income.