Completing the W-2 Form

By the end of January, the church treasurer must provide an IRS Form W-2 to the pastor and any other staff member that received compensation last year from the church. On the other hand, IRS Form 1099s must be provided to “independent contractors,” such as evangelist. A line-by-line discussion of how to complete the IRS Form W-2 is included here. Completing the IRS Form W-2 should be relatively simple for the church treasurer. Additional information can be obtained from the Treasurer’s Manual available at www.benefitsboard.com. Step-by-step instructions and tips follow:

  • Box a – list the employee or minister’s Social Security number
  • Box b – list the employer/church’s IRS identification number. Every church should have an Employer Identification Number. If not, the church treasurer on behalf of the church may obtain an Employer Identification Number (EIN) by completing IRS Form SS-4 or by applying on-line for an EIN number at http://www.irs.gov/businesses/small/article/0,,id=102767,00.html.
  • Box c – list the name and address of the employer/church
  • Box d – nothing goes in this box generally
  • Box e – list the name of the employee or minister
  • Box f – list the address of the employee or minister
  • Box   1 – list all reportable taxable income for the employee or minister (do not include employer/church retirement plan contributions, amounts reduced from the employee or minister’s salary through a valid salary reduction agreement, or ministerial parsonage/housing allowance).
  • Box   2 – if the minister voluntarily requested that federal income taxes be withheld from his taxable compensation, including additional amounts to cover his Social Security tax liability, then list those amounts here. If there was no voluntary withholding agreement, nothing should appear in Box 2 of the minister’s Form W-2.  Of course, all Federal income tax withheld from an employee’s compensation should be listed here.
  • Box 3 through Box 6 – nothing appears in these boxes for ministers.
  • Box   3 – for employees, the amount of compensation subject to Social Security appears here. The church treasurer should be aware that the “cap” amount subject to Social Security adjusts each year based upon inflation. The treasurer should also be aware that while salary reduction amounts withheld from a minister’s income are not taxable for income tax purposes or Social Security tax purposes, salary reduction contributions for non-ministers are taxable for Social Security purposes but are not taxable for federal income tax purposes.
  • Box   4 – for employees, the amount of Social Security tax withheld appears here.
  • Box   5 – for employees, the amount of compensation subject to the Medicare tax appears here.  There is currently no cap on how much compensation can be taxed for Medicare purposes.
  • Box   6 – for employees, the amount of Medicare tax withheld appears here.
  • Box 7 through Box 11 – nothing generally appears in these boxes for ministers or employees in a church setting.
  • Box   12 – use the following codes and state the amount (additional codes may be applicable):
    • C – Reports cost of group term life insurance benefits in excess of $50,000 paid by the employer/church
    • E – Reports amounts contributed to a 403(b) retirement plan (like the Minister’s Retirement Plan) by salary reduction from the employee. Please note that retirement plan contributions made by the employer are not reported anywhere on the IRS Form W-2.
    • P – Reports qualified moving expenses reimbursed to the minister or employee. If the employer/church pays the moving company directly, those costs are not reported on the Form W-2.
  • Box 13 – If the minister or employee participates in the Minister’s Retirement Plan, either through employer/church contributions and/or salary reduction contributions, check the box that reflects “retirement plan.”
  • Box   14 – Report housing allowance or fair rental value of parsonage for ministers. For example, if the minister received a housing allowance, Box 14 would report “12000.00 – Minister’s Housing Allowance.” If the minister lives in a parsonage, Box 14 would report “12000.00 – Parsonage Rental Value.”
  • Box 15 through Box 20 – nothing appears in these boxes generally for ministers.  However, in the case of employees, the church will most likely be required to withhold state and local taxes if applicable. If so, then the treasurer would complete these boxes as appropriate.

If such is needed beyond these cursory guidelines, the IRS provides detailed instructions on the completion of Form W-2.  In addition, the church treasurer should seek guidance and advice from a qualified tax professional if he or she is unsure on how to adequately complete the Form W-2 or the Form 1099.  Seeking advice before providing the forms to the wage earner and before filing such with the IRS is much easier than the treasurer trying to correct incorrect forms already filed. A completed sample Form W-2 can be found as Attachment B to the Church Treasurer’s Manual discussed above.

About benefitsboard

Art Rhodes is the President and CEO of the Church of God Benefits Board, Inc. - the administrator of the Ministers' Retirement Plan and the Church Loan Fund, Inc. The corporate offices of the Benefits Board are in Cleveland, TN.
This entry was posted in 01 - January 2014, Form W-2. Bookmark the permalink.

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