amount of cash salary to include in box 1

We have a very small church, of which I am the treasurer.

Our pastor gives us a note with the numbers to write on his W2.

We pay all of his utilities from the church budget.

He adds the $2500 (housing allowance) into his salary as well as having the church pay those bills. He gave me his note and has deducted the 2500 from his amount to enter in box 1 (which is $2500 less than his actual cash salary)

Is this correct?

Comments for amount of cash salary to include in box 1

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Jan 17, 2017
Housing allowance & salary
by: Anonymous

Your situation concerns me.

FIRST: Housing allowance should include whatever bills you are paying for him. In other words, YOU DO NOT pay for those bills-HE needs to pay for them. That's why you are giving him a housing allowance. It's like double dipping.

SECOND: YOU NEED to stop paying for those bills immediately.

THIRD: ONCE you have stopped paying for those bills, you need to add those up and post them on his W-2 as taxable income for the year (and whatever else you have paid for on his behalf)

FOURTH: His salary should be reported as salary and his housing allowance separate as well so he pays less tax for what he received. This is the reason for housing allowance.

ALSO, he is responsible for keeping ALL his receipt for bills paid on his home and he should take them to his accountant showing the actual expenses that he had on the property. That is not your responsibility. Good luck!

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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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