In many smaller churches, the person in charge of preparing payroll or preparing W-2 forms is not always a payroll expert. They may not understand the complexities of clergy tax law or how compensation should be reported on the form. To help, Clergy Financial Resources has prepared a sample Clergy W-2 for reference, which you can access at https://www.clergytaxnet.com/PDF/2011/10W2.pdf.
The biggest difference between a non-clergy and a clergy W-2 is that the clergy W-2 is not subject to Social Security and Medicare taxes. Because clergy are expected to withhold and deposit these “self-employment” taxes on their own throughout the year, there is no reporting of them on the W-2. Boxes 3, 4, 5 and 6 should all be empty or report zero.
Another notable difference on a clergy W-2 is that a clergy W-2 will often report a housing or parsonage allowance in box 14. Box 14 is used to communicate information from the employer to the employee. The tax preparer will determine how much of this amount is taxable and will need to be reported elsewhere on the 1040 return.
If the person preparing your payroll has additional questions about how to prepare or amend a clergy W-2 form, they can also schedule a Clergy Financial Pro-Advisor meeting at https://www.clergytaxnet.com/resources/proadvisor/.
Clergy Financial Resources serves as a resource for clients to help analyze the complexity of clergy tax law, church payroll & HR issues. Our professionals are committed to helping clients stay informed about tax news, developments and trends in various specialty areas.
This article is intended to provide readers with guidance in tax matters. The article does not constitute, and should not be treated as professional advice regarding the use of any particular tax technique. Every effort has been made to assure the accuracy of the information. Clergy Financial Resources and the author do not assume responsibility for any individual’s reliance upon the information provided in the article. Readers should independently verify all information before applying it to a particular fact situation, and should independently determine the impact of any particular tax planning technique. If you are seeking legal advice, you are encouraged to consult an attorney.
For more information or if you need additional assistance, please use the contact information below.
Clergy Financial Resources
11214 86th Avenue N.
Maple Grove, MN 55369
Tel: (763) 425-8778
Fax: (888) 876-5101