W-2 vs 1099

by Ron
(Cedar City, Utah)

I was recently elected to the council of a small church that annually contracts with a retired ordained minister to serve as our pastor. He is 74 and collects social security. A portion of his salary is designated as a housing allowance and he is provided a 1099.

Based upon info that I have read elsewhere at this site, this practice may be questionable. However, I haven't discovered a situation that mirrors ours, that is retired, annual contract, etc. I would welcome any thoughts regarding our pastoral arrangement with respect to a W-2 vs a 1099.

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Comments for W-2 vs 1099

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Feb 22, 2011
Determine if Minister is an Employee
by: Vickey

Which form you use to report his wages would depend on if he should be classified as an employee or self-employed.

If the church does not control his hours, or if he has full control of the church and cannot be hired or fired, then he possibly could be considered self-employed and issued a 1099-Misc.

I would purchase Richard Hammar's Church & Clergy Tax Guide. It has a whole section on determining if a minister is an employee or not. You do not want to incorrectly classify a minister. It could end up costing the minister and your church if he was audited and determined he should have been reporting his wages as an employee.

Note: I am not an affiliate of Mr. Hammar's and do not make any money for referring his books, but I do believe he is one of our nation?s top experts in church and clergy tax law.

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