Clergy W2 - Is this correct?

[BulldogTom]

New client, Pastor at a church.   His W2 shows earnings in box 1, 3 & 5 and withholding from his pay in 2, 4 & 6.    I don't think this is correct.   Shouldn't his Salary be in box 1, blank for the rest of the boxes, Housing Allowance in box 14?  

Or is it possible that he can be treated as a "regular" employee of the church with the church paying 1/2 of his SS & Med Tax?

I know enough about clergy to do a return when everything looks right, but this is different to me.

Tom
Modesto, CA

[jklcpa]

It really depends on facts and circumstances of how they were hired, how they are directed by the organization, if they can be fired...much like any other employee that we look at to determine employee status v. self-employed person. Your client may actually be properly classified as an employee, but you should ask to be sure the W-2 is prepared correctly.

If you google "topic 417" on the IRS page, you'll find more information.

Even for a minister that should be reported as you described and expected, the minister and treasurer can agree to withhold as FIT amounts sufficient to cover the minister's FIT and S.E. taxes, making it possible for the minister to avoid paying quarterly estimates altogether. In that case, the W-2 would be reported with boxes 1, 2, and 14 filled in.

 

[Margaret CPA in OH]

Exemption from SS and MC is not required but is an option for ministers.  They must meet 6 requirements and file timely Form 4361.  It is quite possible this minister either does not qualify and/or failed to timely file the exemption certificate which certifies "I am conscientiously opposed to, or becausse of my religious principles I am opposed to, the acceptance ...of any public insurance..."

[BulldogTom]

There is no 4361 in place for the Taxpayer.  He had a long career in the working world and is not religiously opposed to government payments. 

19 minutes ago, jklcpa said:

It really depends on facts and circumstances of how they were hired, how they are directed by the organization, if they can be fired...much like any other employee that we look at to determine employee status v. self-employed person.

@jklcpa  That is what I wanted to know.

Now I just need to fiddle with the Clergy Worksheet to get the additional SE Tax from the housing allowance on the return.  

I think I have this ...Thanks

Tom
Modesto, CA