Church employees

[Super Mom]

Ok, I've read that if a church pays a Pastor's 50% of SS and Medicare, that must be added to there income because they are considered self employed. However, if the church has employee, 2 of which are ordained and occasionaly preach, does their 50% paid by the church need to be added to income?

[Super Mom]

Ok, the more i research the answer is yes the half the church paid is taxable income. If so, thinking, corrected w-2's should be filed because if fixed on tax return, it won't match irs records unless the additional 50% is shown on scedule c and the church can gross that up on the w-2 next year???? Any ideas?

[Super Mom]

But now thinking that the youth and children's minister's MAYBE wouldn't meet that management requirement, since they are ultimately accountable to the pastor and have to run things by him. Opinions?

[Super Mom]

Anyone else do work for churches or ministers that can tell me there experience with a staffed church with youth and kids ministers in addition to the head minister?

[Burke]

I have one such church. All are treated as clergy and they pay their own SE tax (if they have not opted out.) If your client's church pays it, it is added to income in that year paid to be shown on the next W-2.

[Super Mom]

I have one such church. All are treated as clergy and they pay their own SE tax (if they have not opted out.) If your client's church pays it, it is added to income in that year paid to be shown on the next W-2.

When the church pays it, the money just goes to them or what's called "federal withholding" not paid on 941 which is FICA, right? All their wages are exempt wages on 941 right?

[Burke]

Not exactly following what you are saying. I thought you were saying the church paid the FICA on the 941. If it is giving them the $$$, it is just more income on the W-2. Only wages subj to SE on the 941 would be church employees (not ministers.) All ministers are exempt wages for FICA. Some might have withholding for federal purposes shown in Box 2 on W-2 and this would show on the 941 under federal withholding tax.

[Super Mom]

What?? Not following.

Do you prepare the 941 quarterlies for the churches other employees?

[Burke]

No, but the church office manager does. And it shows all employees and the ministers as well. I usually do the W-2's.

[Super Mom]

Thanks for your help!

[mactoolsix]

For reference

here's a good website - covers minister wages, SS, W2's etc

https://www.freechurchaccounting.com/example-of-pastors-W-2.html

Mike