Can Ministers Income be reported on W2 without filing Forms 941?

[gfizer]

My question relates to the proper way to report ministry income.  My husband is a minister so I'm pretty well versed in tax returns for ministers.  I have a new client who is a minister.  His pay was properly allocated between salary and housing allowance.  The church wants to give him a 1099NEC but the proper way to report the income is on a W2 so that the salary portion can be shown in Box 1 and the Housing Allowance portion can be shown in Box 14.  My question is can the church furnish a W2 when they haven't filed any 941 returns during the year?  The 941 forms would've been informational only because there was no federal income tax withholding and the wages weren't subject to social security or medicare withholding.  Thoughts?

[mcb39]

I say NO!  I have one who does not receive either a 1099 or a W2; just the Profit and Loss Statement from the Parish, which shows his stipend, and everything else.  Have been doing his taxes for over 20 years and it has been SE all the way because we cannot get the Parish to change their method of accounting.  My Priest (client) does not want to rock the boat because he was born and raised in Poland and is afraid of the Government.  Perhaps you could help me.  He also does have a W2 from the Hospital where he is the Chaplain.

[DANRVAN]

On 2/2/2024 at 9:58 AM, gfizer said:

Thoughts?

I answered your question on another thread, but will give you more details from my experiences.

If your client wishes your assistance in this matter you need to make it clear how you will go about doing this.

 Most likely you will need to send a letter on his behalf to the church explaining why they should treat him as an employee instead of an independent contractor.   You will also need to inform them of the requirements to file all federal and state employment reports as well as workman's compensation coverage.

You will also explain the issue with the housing allowance.

In my most recent experience after going back and forth, the client told me to go ahead and fix it on Schedule C.

 

[DANRVAN]

2 hours ago, mcb39 said:

My Priest

I am curious if he is a Roman Catholic Diocesan Priest.

Our diocese has payroll procedures for individual parishes to follow.

[Lee B]

2 hours ago, mcb39 said:

I I have one who does not receive either a 1099 or a W2; just the Profit and Loss Statement from the Parish, which shows his stipend, and everything else.  

Creative imagination at work?

[mcb39]

On 2/3/2024 at 12:39 PM, DANRVAN said:

I am curious if he is a Roman Catholic Diocesan Priest.

Our diocese has payroll procedures for individual parishes to follow.

He is a Polish Catholic National Priest.  Not under the jurisdiction of the Pope.

[mcb39]

On 2/3/2024 at 12:44 PM, Lee B said:

Creative imagination at work?

Very Creative Bookkeeping, but I am sure that they are honest in their own way.  The Priest will not allow me to confer with the bookkeeper.  He has been a client since 1999 and has never been questioned.  My fear is that he is paying too much tax; but his fear of the Government is palpable.  When he first came to me, I went over three prior years of returns and never did figure out how that preparer was arriving at the amounts that he did.  I claim everything on the Church's final report that is designated to him and then wipe a great deal of it out with expenses; primarily mileage.

[schirallicpa]

Funny - scroll back a few days ago I had a minister pay headache myself.  In my case we had always filed 1099 and come to find out the treasurer was filing 941.  I created a W2 and will not continue with this particular client in the future.