W2's and filling out all income

by Sean
(Reno, Nevada)

We are trying to help our church with their finances.

The church is giving a cash allowance for medical and retirement $3000 per month.

On the past W-2s this was not included in box number 1 of the total income.

Is this supposed to be included in box number 1, or just not reported at all?

If it is supposed to be reported, how do we correct the past wrongs?

We have only been a church since 2022

Comments for W2's and filling out all income

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Taxable Allowances
by: Vickey

First of all, you should consult a knowledgeable tax professional as you are probably going to have to file some amended payroll returns =(

Just the word "allowance" usually indicates taxable income that MUST be reported in Box 1 of an employee's W-2 as there is usually no documentation required. The employee can do whatever they want with the money ... so no matter what you call it ... it's taxable compensation.

Also, when you say "cash" allowance, I am assuming you are referring to paying the employee with a paper check as sometimes people refer to paper checks as "cash".

If you are referring to actually paying them in cash, I strongly advise you to stop that practice as soon as possible and pay everything including the "allowance" with at least a paper check, so you can have a paper trail for all church expenses.

NOTHING ... except for small "petty cash" stuff should ever be paid with cash with a church.

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