W-2/1099-NEC Tips

A W-2 form must be issued to any employee (including ministers) who received compensation from the local church during the previous tax year. In addition, 1099-NECs (a new form) must be issued to all independent contractors who received more than $600 from the church in the year.  In completing the forms, here are a few tips to remember:

  • The W-2 forms must be completed and issued to each employee by no later than January 31. The employer/church must then make sure that they submit to the Social Security Administration “Copy A” of each W-2 form and the W-3 transmittal form by the same date – January 31. (NOTE the new date for filing W-3s.)
  • Form 1099-NEC and Form 1099-Misc. must be provided to independent contractor by January 31, and the forms must be filed with the Internal Revenue Service using the Form 1096.
  • You can obtain blank tax forms from your local IRS office, your local post office, or by calling the IRS toll-free forms number (1-800-TAX-FORM).
  • All dollar entries should be made without dollar signs and commas, but with a decimal point and cents. For example, $1,000 should read as “1000.00.” If you put down 1000, the IRS scanning equipment will read that as $10.00 – so make sure that decimals and cents are used.
  • If a box does not apply, leave it blank. Do not insert “0” or “N/A.”
  • Make sure that you use the correct employer identification number (EIN) for the church/employer. This is critical especially if you have more than one entity (such as a church school) operating under a similar name.
  • In identifying employees on the W-2 (Box e), do not include titles, such as Rev., Mr. or Dr. Also, do not include suffixes such as Jr. or Sr.
  • Make sure that the ministerial housing allowance or the fair rental value of the parsonage is not included in Box 1 wages on the W-2. However, do include insurance assistance payments provided to pay individual healthcare policies. Note that the fair rental value of a parsonage or ministerial housing allowance should be reported in Box 14 on the W-2.
  • Pastors should receive a W-2. If they receive a 1099-NEC, they are not entitled to employee benefits, such as housing allowance, expense accounts, and retirement contributions from the church.
  • Check the retirement box in Box 13 only if the minister or church-related employee participates in a recognized retirement plan, such as the MRP.
  • Retirement plan contributions made by the church on behalf of the minister or a church-related employee are not required to be reported at all on Form W-2. However, any amount contributed by salary reduction agreement should be reported in Box 12 of the W-2 form, using the code “E”.
  • Make sure the ink on the forms is not too faint, and that the writing is legible and not too small.
  • If you need additional assistance in completing the forms, review the examples contained in the Treasurer’s Manual or Ministers’ Compensation Manual available on the Benefits Board’s website or for specific information, you may call the IRS directly at 1-866-455-7438 for assistance.

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.
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