what is the level of pay where a W-2 is required?

by Tony
(TN)

As a new church, we started to pay our pastor a housing allowance of $4600 this past year along with a salary
of $10 (just to be able to satisfy the association that we pay a salary).

Our goal is to continue to increase these levels but we wanted to not have to pay taxes until we maxed out his housing allowance.

What is the minimum amount of salary that is required to be reported to the IRS?

Thanks

Comments for what is the level of pay where a W-2 is required?

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Feb 15, 2012
Salary
by: Evangelist Joyce Walker-Davis

Im thinking; if I remember clearly the minimum salary would be $500.00 dollars or more per week.

Let me know if you find out anything different.

Feb 15, 2012
W2 rules
by: Pastor Kim

Anyone receiving payment for services on a continual basis, and when it amounts to over $600.00, they get a w2. If you give an honorarium of over $250.00 to any one person, even just one time, they get a w2. If you do give an honorarium, get them to fill out the w2 right away before giving the check to them. Why, because you will need their social security number. I have found out the hard way, that it is almost impossible to get afterwards.

Feb 15, 2012
Level of Pay required to issue W-2
by: AChurchTreasurer10

Are you talking W-2 or W-9?

It is my understanding that a W-2 is issued for any amount paid to an employee.

For independent contractor's a W-9 is requested from the contractor. If $600 or more is paid to the contractor during the tax year, then a 1099 is issued to the contractor, not a W-2.

Pastor's in my denomination are issued W-2's for their salary received. Housing allowance is added to the salary on the W-2, but only after deducting the Housing Exclusion, which is different than the housing allowance. The Housing allowance and the Housing Exclusion are not necessarily the same amount. So the W-2 would be for Salary + Housing Allowance - Housing Exclusion.
Withholding taxes are not generally withheld from the Pastor's check.

Feb 15, 2012
Level of Pay Required to issue W-2
by: AChurchTreasurer10

Additional to earlier post:
As mentioned before, taxes are not normall withheld from the pastor's check. If the Pastor is your church's only employee, I doubt if the church has any taxes to pay regardless of the amount of the Salary. The pastor is generally considered self employed for tax purposes. However the church will need to Issue a W-2 to the pastor and file Quarterly 941's.
These are my opinions and I am not an accountant, but this is my understanding of the IRS rules regarding Pastor's.
I will be glad to be educated along With Tony, the author of the original posted question.

Feb 17, 2012
Is W-2 Required
by: Terri

A pastor can opt out of having taxes withheld from his wages. He also must be the one who determines the amount of his salary that will be designated for his housing allowance - not the church committee.

This form must be completed and signed by the pastor prior to the new year. When you have only the pastor as your employee and he has opted out of having taxes withheld, you do not file the quarterly 941 returns, but you do issue him a W-2 - even if it only for $10.

You would then complete the W-3 and copy A of the W-2 and send both to the Social Security Administration. You would indicate his housing allowance in box 14 of the W-2 for his tax purposes.

The $600 rule applies to 1099's and not to W-2's.

If the pastor is an employee of the church, there is not a minimum amount to be considered.

All wages paid are to be reported on the W-2.

If he is a pastor of multiple churches and you are not his only source of "pastor" income, he may elect to be a contractor and you would give him a 1099.

You may have musicians that also fall into this category. Then you would file the 1096 with the IRS.

Feb 17, 2012
Pastor's W2 info
by: Anonymous

Pastors are NOT subject to withholding for any tax, although they may opt to have federal income tax withheld. See IRC 3401(a)(9).

There is no minumum salary that needs to be reported. Housing allowance, may, but is not required to be reported. If it is, it is merely noted in Box 14 of the W-2.

Ministers are not necessarily classified as employees; they may be contract worker, depending on the arrangements with the church and whether they have the characteristics of an employee under common law.

Feb 17, 2012
PASTORS INCOME
by: HOWARD'S INCOME TAX

PASTORS ARE CONSIDERED EMPLOYEES. SEE NATPA TAX PROFESSIONALS CLERGY TAX LAW. VIEW IT CAREFULLY.

IT IS TRUE UNLESS THE PASTOR REQUEST A FEDERAL OR STATE WITHHOLDINGS THEY ARE NOT REQUIRED.

EVANGELIST MAYBE CONSIDERED CONTRACTORS.
THEY COME AND GO DOING THE YEAR. IF PAID $600.00
OR MORE THEY NEED TO BE GIVEN A 1099MISC. THE EVANGELIST CAN USE SCH C FOR HIS HOUSING ALLOWANCE AND DEDUCTIONS. BE CAREFUL WITH THE HOUSING ALLOWANCE FOR EVANGELIST SINCE THEY ARE STAYING IN THE AREA OF THERE REVIVALS.

HOWARD'S INCOME TAX AND ACCOUNTING PAYROLL SER

Feb 26, 2012
thanks
by: Tony

I appreciate the responses and help. God bless.

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