The payroll process for churches can be a difficult and confusing task. Requirements include filling out withholding forms (W-4), withholding federal income, Social Security, and Medicare taxes from employees’ wages, depositing these taxes with the IRS, filing...
Q: How does completing the annual IRS Form W-2 differ between ministers and non-ministers? A: The IRS Form W-2, Wage and Tax Statement is used to report an employee’s total gross wages and taxes withheld during the calendar year. As a reminder, employers are...
Q: Our church provides an apartment for our secretary and a house for our campground caretaker. Neither employee is a minister. Is this taxable income for both employees? A: Paying rent or providing a stipend for housing expenses are ways that some churches...
Q: A local automobile dealer wants to provide our pastor with free use of an automobile. Can we give the dealer a contribution receipt equal to the lease payments he would have received during the same time period? A: Unfortunately, no. The automobile dealer has only...
Q: The church board wants to give a $100 Christmas gift to the pastoral staff. Is it acceptable to increase the amount so that each pastor receives $100 in net pay? A: The terms “gross” and “net” are frequently used when discussing payroll. Gross pay is the total...
Q: Our church paid an honorarium to a guest speaker who was not a U.S. citizen. Do we need to report the payment on a Form 1099-MISC or another form? A: Yes, the church should report the payment to the IRS, but not on a Form 1099-MISC. There are different...
I’ve always believed that appreciation is the highest form of currency that exists and when congregations show honor and appreciation, it is like putting gas in the spiritual tank of a pastor and his family. Early in my ministry career, Rita and I were pastoring a...
Q: My church board has designated 50% of my salary as a housing allowance. Is there a housing allowance maximum that ministers are not permitted to exceed? A: While the tax code does not limit the amount of a minister’s salary that may be designated as the...
Q: What types of fringe benefits should be included as taxable income on the Form W-2? A: Fringe benefits offered by employers can be taxable or non-taxable. Here is a list of 10 common fringe benefits offered by churches that will result in taxable income...