Clergy Tax Clergy Tax Facts  
     
Clergy W-2 Form  

Ministers working for a church or church agency should receive a Form W-2 by January 31, 2011. Ministers who report their federal income taxes as self-employed on Form 1099, may face a significant risk of additional taxes and penalties, if they are audited and reclassified as employees by the IRS.

While the majority of ministers are employees for federal income tax purposes, they all are self-employed for social security purposes. This means that ministers are exempt from social security and Medicare withholdings, even though they report their income taxes as employees and receive a W-2 from their church. Rather, they pay the self-employment tax on Schedule SE when filing their return.

Determining a taxpayer's correct reporting status under the common law employee test is often difficult. The IRS has developed a list of 20 factors to be used as an aid in determining whether an individual is an employee as defined by the IRS. For more information on the correct filing status, please feel free to contact us.

The IRS has postponed the requirement to report employee health insurance costs paid by the employer on Form W-2 until Forms W-2 are issued for 2012. The item is only for disclosure, and will have no tax effect. The reporting requirement was enacted as part of the Patient Protection and Affordable Care Act of 2010.

Health Care Reform Legislation Requires that W-2s Show Value of Health Coverage for 2012

2010 Clergy W2 Form Instruction

 

Clergy should not view this information as a substitute for professional advice. This information is subject to change, due to administrative rulings or interpretations and or technical corrections by the IRS. If legal advice or other expert assistance is required, the services of a competent clergy tax professional person should be sought.