A non-minister church employee becomes ordained as a minister in the middle of the year.

by Rhonda
(Bossier City, LA)

An existing church empoyee becomes ordained as a minister in the middle of the year.

I understand that a housing allowance can be established mid year, as long as the church body approves it.

I’m questioning how I will prepare the W-2 at the end of the year. Some of his income will be subject to FICA/Medicare tax, and some will be subject to self-employment tax.

I think I put the entire earnings for the year (without the housing allowance) in box 1. Boxes 3 and 5 will have only those earnings that were distributed prior to his becoming an ordained minister.

The issue is that the schedule SE does not seem to have a provision for reporting only a portion of the dollars in box 1. I’m wondering if I can create two W-2s for the same person.

One for his time as a non-minister, and a second one for his time as a minister. It’s very confusing, and researching IRS tax code is the most confusing thing of all. Thank you for any insight that you can offer.

Comments for A non-minister church employee becomes ordained as a minister in the middle of the year.

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Apr 03, 2023
2 W-2s
by: Vickey

I would like to hear other people's opinion on this as I have heard "conflicting" opinions on this "occurrence"=)

I would issue 2 W-2s.

For one thing, I believe that having FICA wages and SECA wages in the same W-2 may cause a "red flag" with the IRS. I know you would have all of the documentation to back up why you did that, but I wouldn't want to mess with the time it would take to "straighten" all of that out =(

So, I would treat it as the nonminister "quitting" his "nonminister" job and beginning the new "minister" job and issue 2 W-2s=)

Apr 04, 2023
A non-minister church employee becomes ordained as a minister in the middle of the year.
by: Anonymous - MN

Not having any expertise in this situation I am impressed with your reasoning to suggest issuing 2 W2s and think you have made a valid suggestion.

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Join in and write your own page! It's easy to do. How? Simply click here to return to Minister's W-2.

If you want to DIY your payroll, I highly recommend you look at using Gusto! It is very user friendly and their support is awesome! Plus they know how to set up and maintain payrolls for churches and nonprofit organizations.

Note: I am a "partner" of Gusto, but as I have told you before ... I never recommend anything that we or our clients have not tried and love =)



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