The W2 Form Should a Minister Receive a W2?

The vast majority of ministers are actually employees of the church.

For many years the I.R.S. has considered most ministers to be employees of the church. None of the new tax laws have changed I.R.S.’ intent to have ministers treated as employees of the church.

A properly structured compensation package and accountable expense reimbursement plan will reduce income and Social Security taxes to the legal minimum.

Withholding of taxes (ministers filing as employees) is still on a VOLUNTARY basis. If the church and the minister both want to do it, income taxes can be withheld. The law PERMITS but does NOT REQUIRE withholding for ministers.

If taxes are withheld, an amount equal to the Social Security tax (SECA) can and should be withheld, but it must be listed as ‘federal income taxes withheld”

FICA and MEDICARE taxes should NOT be withheld from a minister’s paycheck.

If you need help with handling payroll, we can help.

Posted under Church Taxes

This post was written by burbrink on September 10, 2008

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