What are the IRS reporting requirements?

by Donna Campbell
(Reno, NV, USA)

I've been a treasurer/bookkeeper for a number of very small churches and in several of them I have let the pastor (church voted on it) choose to designate all of his salary toward his housing. It has never been more than $1,000 a month. I have been confused about how to report this. Years ago, the housing allowance was not required to be shown on the W-2 but in the last 10 years or so I have been reporting it in the Other (box 14). But what about the 941...there is no place to put that information and do you still have to do a W-3? Can you just give the pastor a letter from the church of the amount of housing allowance paid for him to use on his tax return?


I'd appreciate further explanation to the reporting requirements. I do agree with your assessment of the housing allowance issue and was glad to hear it because I have been doing it for years. In looking at the IRS rules, I don't know where they are coming up with the "no more than 1/2 of the salary." I just don't see it.

Thank you for your research and sharing with those of us who do not have CPA degrees.

Comments for What are the IRS reporting requirements?

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Jul 04, 2014
Form 941 and Housing Allowance
by: Vickey

On page 3 of the 941 instructions, under "When to File" it states: File your initial Form 941 for the quarter in which you first paid wages that are subject to social security and Medicare taxes or subject to federal income tax withholding.

A church does not pay wages "subject to social security and Medicare taxes or subject to federal income tax withholding" with only a minister employee, so it is not required to file a form 941.

Yes, you can just issue a statement from the church declaring the housing allowance amount paid for the year; however the debate is whether or not a church is required to issue a W-2, if the minister's entire compensation is designated as a housing allowance.

Richard Hammar stated in his Church and Clergy Tax Guide (pg 555 in the 2014 edition) that "IRS Revenue Ruling 2000-6 suggests that a church may not be required to issue a W-2 to a past-time pastor whose entire income is designated as a housing allowance."

But he also stated that "the revised section 6051 of the tax code (read literally) requires churches to issue a W-2 to a minister even though all income is designated as a housing allowance."

His advice is to call the IRS at 866-455-7438 and ask them. BUT I have known many people that got hold of a IRS representative that knew NOTHING about churches and got bad advice...which the IRS has stated they are not liable for...so keep that in mind if you call.

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