It is a busy time for church treasurers in January as you begin preparing for tax reporting this month. This is a reminder of a few helpful hints for you at this time of year:
- Pastors and employees of churches should receive a W-2 reporting their taxable wages on or before Jan. 31. Pastors receive W-2s, not 1099s.
- Christmas gifts or love offerings paid to pastors or other employees of a church through the church accounts are taxable and should be included on the W-2s.
- Clergy pastors are self-employed for social security purposes – this means you do not report social security wages on their W-2s.
- If your church pays a housing allowance to the pastor, the IRS requires you to have a housing allowance exclusion resolution in place. If you do not have one, you need to take care of it right away since they cannot be applied retroactively.
Clergy tax reporting is very different from reporting for lay employees. We have resources on our website under Training Materials to help with completing the forms. Churches are not exempt from payroll tax reporting!
Happy new year!