What happened to the $9,000

Using the example - I believe you are saying the "cash" amount received for the year is $25,000.

What happened to the $9,000? It isn't subtracted from anything.

Is the actual gross $25,000 + $9,000 for $34,000 but then you subtracted out the $9,000 because a minister doesn't pay income tax on housing and the reported about on line 1 of the W2 is $25,000 + car allowance and SS.

You didn't subtract the $9,000???

We are trying to work this out with our minister now being an employee. His "cash" annual is $70k. The designated parsonage allowance (no actual outlay of cost for him but his "use" for being minister) for rental and upkeep at $56k.

So is the amount we report on line 1 of the W2 $70k (as his gross would be $70k plus $56k) or $70k minus $56,000 for $14k.

I guess the question is this - is the $56,000 a part of the $70k so we subtract the two or is it in addition to and we add the $56k to the $70k to get to the gross?

Thank you. I have read about everything I can and still have trouble understanding it.

4Comments

The $25,000 was the Pastor's base salary

VVickey

I apologize. My figures are correct, but rereading the article, I see where the misunderstanding came into play.

I cannot "subtract" the 9k from Box 1 as it was never included in the first place.

The $25,000 was his base salary. It did not include what he was paid for a housing allowance.

So if you add the $25,000 base salary and the car and SECA allowance...you will come up with the number I have in BOX 1 of the W-2 example.

Could all of you look at what I added to that page and tell me if that clarifies it better?

https://www.freechurchaccounting.com/example-of-pastors-W-2.html

If not, could you give me an example of what I need to add to make it more understandable?

This thread is in error

AAnonymous

Kathy- I've researched this and believe this original post is in error. The housing allowance should NOT be included in Box 1. There are other threads on this site and many other sources that state this. This page is written in error or poorly written.

Would like an answer on what happened to the $9000

KKathy

I am also waiting for the answer to this question. If you subtract the housing allowance from box 1 and enter that number on line 7 of the 1040 it will not match the W-2. Housing Allowance is excluded from federal income tax. Should not the housing allowance be subtracted from box 1 of the W-2?

Box 1

AAnonymous

I have the same question as the first. Every source I can find shows that the housing allowance should be subtracted from the income in Box 1 of the W2....except this one. Why are you not subtracting the $9,000 from the income amount in Box 1?
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