Social Security, House Allowance, w2 or Misc 1099, salary

by Belinda
(TX)

I have been the office admin for a couple of years. I started with just taking record of tithes and offering. Pastor had someone doing their 941'S and issued their W2'S. I just continued what that accountant had been doing. Over the years I have tried to learn a little more about clergy benefits. Now I feel we are completely wrong on how the process should be.

1ST The church pays the Social Security and Medicare through the 941 from the salary amount only and it is never reduced from his salary or paycheck he recieves.

2ND The housing allowance has never been included on the w2 OR 941 OR anything. Should it?

Not sure if he files self employment tax and if so housing allowance has not been supplied to him. He has never gotten income tax withheld. Should I supply that amount to him? And should it be reported?

3RD I just started as an employee of the church as a part time employee receiving an hourly pay. Do I send in a W4? or can I get a 1099 MISC at the end of the year and just get FIT taken out?

4th Is there a certain amount of people that should be on the BOARD or is that something that the PASTORS can decide?

5th Should there be just 1 salary for the Pastoral household or can there be 2? ( for him and her)

I wait eagerly for a response...I really love this website. GOD BLESS!!

Comments for Social Security, House Allowance, w2 or Misc 1099, salary

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Question 1 and 2
by: Anonymous in N C

1. A pastor is considered an employee of the church and receives a W-2, but they are considered as self-employed when it come to SS taxes. They are suppose to file and pay estimated taxes to cover their income taxes and Social Security and Medicare taxes. A properly executed housing allowance is excluded from his/her income tax calculation when totaling gross taxable income, but it is added back to gross income when figuring and calculating Social Security and Medicare taxes. You have stated that you (the church) pay the pastor's SS taxes, so if you have excluded a housing allowance amount in that calculation it would need to be added back to it for a proper amount of tax.

2. A 1099 would be correct for a properly classified contractor. IRS has strict rules on the difference between contractors and employees(see employee or not on the tab to the left of the screen).
Dear Anonymous in NC
by: Belinda

1) How does a Pastor pay social security taxes on the housing allowance?

2) I say I am employee to the church but basically I would consider myself more of a contractor. I help in the office and work on documents off an on. If this is the case no W4 or W2 is required, correct? I would file 1099 nonemployee compensation, correct?
Her Title
by: Belinda

Thank you for the info you have submitted. Hert title is Pastor's wife and as an officer she is the secretary. Didn't know if legally there would be a conflict in giving her a salary.

Right now we are just three in the board...Pastor, wife, and myself. The church is growing and just wondered if it is best to include more people just so there will be more of a balanced opinion. Our bylaws at this point have 3 or more....but checking on that as well.
SS, Housing, w-2 or 1099?
by: Anonymous in NC

1ST The church pays the Social Security and Medicare through the 941 from the salary amount only and it is never reduced from his salary or paycheck he recieves. [The church board has the option of choosing to pay this or not, but it must be reported as additional income to the pastor on his/her W-2 form when it is paid by the church.]

2ND The housing allowance has never been included on the w2 OR 941 OR anything. Should it? [IRS does not require the housing allowance amount to be included on the W-2 so therefore it would not go on the 941. The church should report in writing to the pastor the amount of the housing allowance that is paid to him, because he/she is required to pay Social Security taxes on that amount. Also, housing allowance can be reported on the W-2 form in Box 14. It is not included with his/her income in Box 1.]

Not sure if he files self employment tax and if so housing allowance has not been supplied to him. He has never gotten income tax withheld. Should I supply that amount to him? And should it be reported? [It is the pastor's responsibility to do this. This question is more clearly explained in the previous answer to previous question.]

3RD I just started as an employee of the church as a part time employee receiving an hourly pay. Do I send in a W4? or can I get a 1099 MISC at the end of the year and just get FIT taken out? [The key to your question is "employee", so you would fill in a W-4 and receive a W-2 form at the end of the year.]

4th Is there a certain amount of people that should be on the BOARD or is that something that the PASTORS can decide? [This depends on the church bi-laws, but it would be a conflict of interest for the PASTORS to decide this.]

5th Should there be just 1 salary for the Pastoral household or can there be 2? ( for him and her)
[only 1 salary per employee--what is "her" employment title?]

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