Should a pastor recieve additional compensation payment that is outside of the payroll check?

The pastor at our church is an employee of the church and receives a paycheck regularly.


In addition to the paycheck a separate check (non-payroll and no tax deducted) is given for house allowance and a reimbursement for healthcare premium.

In total the pastor receives three check every two weeks, 1 for his salaried hours via payroll and has been reduced by tax, 1 regular check from the church checkbook for house allowance without tax deductions, and 1 regular check from the church checkbook to reimburse the pastor for the payments he made to get healthcare insurance since the church does not provide health insurance.

Is this correct, legal?

Should it all go through the payroll just some items not taxed?

Comments for Should a pastor recieve additional compensation payment that is outside of the payroll check?

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Apr 01, 2017
Compensation Payments
by: Bill OConnell

Your structure is OK, but you are silent about supplying a W2 which is required in this case.

If the church is supplying a W2, why not simply report the Housing Allowance in Box 14?

Lastly, your medical treatment is allowed for "plans fewer than two" PROVIDED that you have an approved HRA plan document. Does the church have a formal plan? And is the pastor the only one in the plan?

In December Congress passed further relief in the form of QSEHRAs. These can have multiple members in the plan, but there are limitations on amounts paid. And a formal plan document is also required.

Call me at 877-823-3101 x1 with questions or to obtain a formal plan document.

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