Payroll and Forms for pastor which has a secular job along with ministry.

by Jakob Wildersterd
(Troy, MI, USA)

We have a very small church (just few couples) we just started and we would like to pay something to our pastor (he is an ordained minister) but not as a regular basis salary, just as an appreciation for serving congregation few times per year (we can’t provide perishing house or other extra great things because we don’t have those funds). Also, church doesn’t want to get burdened with anything else, like extra paper works to do and consider paying the whole amount to pastor and he will have to deal with taxes and reporting. He is having also another secular job where his taxes are automatic withhold. Here are the questions:

1)If he (pastor) gets the whole amount in hand, let’s say $1,000 he will have to fill and pay 15,7% of taxes using 941 form or he will have to fill only 1040ES every quarter (knowing he will get those appreciations 2 or 3 times a year only?) even he cannot estimate how much moneys he will be getting; or may be at same time with income tax in the next year?
2)Another thing is if he already has a job he already have filled there a w4, do you think he will have to fill another one with church (we are in Michigan and his church as well his job is in the same city)?
3)Last question is how he can order these forms by mail or fill online?

Thank you so much in the Name of the Lord! Your website is a wonderful source of help for us!

2Comments

Consider W-2 and 1040-ES

AAnonymous

I think you have to consider W-2 and let your pastor know he will have to use 1040-ES to avoid problems. I assume your little church is planning to pay him between $4,000-$8,000 a year resulted from few appreciation days or love offerings which can be estimated on 1040-ES. Now, because he is already employed in another job and you said he gets there his W-2 and have a W-4, perhaps you can give him 1099 MISC --- assuming his time in working for church ---- but I'm not sure this would be right. There are many CPAs who doesn't recommend giving 1099 MISC in any circumstances.

Part-time pastor with secular job

MMarcusNTexas

Considering the small amount you intend to pay this part-time pastor, issuing him a form 1099 MISC in January or February after the end of each year would seem the best. That way, he can include that income on the tax return he will file for his other earned income. The form 1099 MISC can be requested from the IRS web site. The main thing is that your little church elect or appoint someone to serve as treasurer to maintain the financial records, pay the bills, issue the 1099 MISC to the part-time pastor and take care of other financial matters.
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