Example of Pastors W-2 Forms:
As I stated on my
"Ministers: Employee or Not"
page, most of the time a pastor/minister is considered an employee of
their church and should be issued a W-2 to report their compensation.
How to fill out a Minister’s W-2 Form
Payroll is something you want to get right as it affects your employees and legal situation.
See a step by step payroll guide for more information on setting up a proper payroll for your Pastor and employees.
One of the most important factors to keep in mind while setting up a payroll for a church is that your minister's payroll is handled differently than your nonminister employees.
See this page on clergy tax to learn how to properly handle a minister's pay.
See this page for how to handle your nonminister employee payroll taxes.
See the example of a pastors W-2 below for tips on handling a pastor's pay, housing allowance, and even business expenses.
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Example of Pastors W-2:
Pastor Smith has a base salary of $25,000. (NOTE: His base salary does not include his housing allowance!)
He is also received $9,000 for his housing allowance in addition to his salary.
(His housing allowance was properly set up with an adopted resolution before it was paid.)
Pastor Smith also has a non-accountable car allowance of $2,500. The church has set up an accountable reimbursement policy and Pastor Smith has been paid $1500 for appropriate business expenses.
Pastor Smith has not requested any voluntary federal income tax withholding by the church. He makes quarterly estimated tax payments . The church gives him a social security tax allowance of $500 a month to help with his self-employment tax.
So the TOTAL amount paid to Pastor Smith for the year is: $44,000
Breakdown of that amount:
$25,000 base salary
$9,000 housing allowance
$2,500 car allowance (he is not turning in mileage logs and paid a set amount, so allowance is taxable income)
$6000 SECA Allowance (a church can pay such an allowance, but it is taxable income)
$1500 (accountable reimbursement business expenses)
The Policies and Procedures Package includes an ebook on Receipts and Reimbursements that explores the management of receipts and supporting documents.
Additionally, it provides insights on establishing and managing an efficient accountable reimbursement policy.
Includes a sample of a resolution you can use to present to the board to set up and approve an accountable reimbursement plan.
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This ebook is included in the Policies and Procedures Package. However, you can purchase it by itself for only $7.95 by clicking the ADD TO CART button below!
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The Receipts and Reimbursements ebook is also part of a larger "Policies and Procedures" Package" that is packed full of valuable information and for a limited time you can purchase all 5 ebooks and 8 policy templates for only $32.80
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Example of pastor's W-2 instructions:
- Fill out the information boxes a, b, c, e, and f.
- Include his base salary of $25,000, his unaccountable car allowance of $2,500, and the $6,000 social security tax allowance in Box 1. $33,500.00. Note that we did not include the tax-free amount of $1,500 (accountable reimbursements) It would not be reported anywhere on the W-2.
- Leave boxes: 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, and 13 blank. Do not insert 0s.
- Put the housing allowance in Box 14: Housing: 9000.00 [Optional...could also just include the amount of the allowance in a separate letter to the minister. (This separate letter should not be sent to the IRS and will not be included or attached to the minister's personal tax return.)]
- Complete boxes 16-20 according to your state’s requirements.
The Compensating Ministers Package includes three ebooks on how to compensate and pay your ministers; what minister benefits could potentially hurt the minister and the church; how to set up a housing allowance and report it; and how to handle ministers' gifts/love offerings. Also includes an example of a W-2 for a minister.
Additionally there is a sample of a resolution you can use to to set up and approve a housing allowance for your ministers; an estimate worksheet for the minister to use to help the church determine the amount of the housing allowance; and an example of a notification letter the church can use to inform the minister on the amount of housing allowance payments paid during a calendar year.
All 3 ebooks are only $18.55 PLUS you can use the discount code: FCA for an additional 10% off!
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Questions and Comments on Ministers' W-2s
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