6 Tips: How to Pay Your Pastor/Minister & How to Report Your Clergy Income

In this video, I simplify paying your church's pastor/minister and how the he or she reports his Ministerial Earnings for taxes. This situation is often reported incorrectly and my goal is to help you get it right! I cover:
1) Salary and the Housing Allowance
2) Income Tax Withholding
3) Social Security and medicare taxes
4) Medical Insurance Reimbursements
5) Other payments paid directly from members for other ministerial services
6) Exemption from Self-Employment taxes (SS & medicare)

[jamesmccluskey]

Acts 18:3-Isaiah 55:1-1Corinthians 9:18-John 10:11-13- Acts 18:3- made their money as tentmakers (Not Minister.)

[liviniacampbell]

My pastor receives a salary and money for church anniversary and extra love offering. For the 1099 form will all the additional money have to be included?

[gloriaevasquezdebustillo]

Great information. If a ministers pays his wages, social security and medicare taxes, and has housing allowance, is the income and housing allowance needs to be reported in the SE form?

[tylamb]

Thank you for your teaching and clarification. It is very helpful.

[blessedandbeautiful]

I appreciate this video. Tfs.
Question: How does the church actually pay the housing allowance. We send out salary check each month to our Central Chruch and they then send us a weekly check to total the amount we sent to him as his salary payment but the housing allowance was never explained. We are a small church and right now I am over everything administratively 😊 but it's true. Our church is semi-independent of the central church, I guess 🤷🏾‍♀️ bc we have our own EIN#, our own Board of Trustees but we are still under the central church. I don't know how to accurately explain it but it's kind of like we have the same name but we are distinguished bc of our place of worship. For example, the central church is in Florida but our location is in New Jersey. Same name but different bc we our of Christ Church of New Jersey whereas they are just Christ Church, for example. Our pastor was approved by the Board to receive salary plus a housing allowance but we never paid the allowance out. I pay the salary to central church then they distribute it to us on a weekly basis. I don't know how to actually pay the allowance. Is he to be reimbursed after he makes his mortgage payment, let's say for example or do I send the church check to the mortgage on his behalf. I am so confused about how to actually give him the funds bc technically he was approved for it in the minutes and through Board approval. Should he turn in his utility bill to the church then its paid? I am asking bc last year he was approved a significant amount for housing allowance but was not paid one penny of it bc we don't know how to actually disburse it. Can he be paid in advance, weekly, how? He knows what is the anticipated amount for the year but bc he is unaware of the administration of it as we are it just goes mute and ignored I hope I am making sense. Is there a book or reference that can guide me in this area that you know of? Please advise

[jtaylor]

If a church voluntarily pays the pastor thru the year as a regular employee, paying in the FICA and doing Federal withholding but wants to have a housing allowance, Can i deduct the housing from gross pay on the W2 and then also deduct if from the 941 gross pay all done on the 4th quarter?

[masongilani]

Hi Amanda - I have a pastor in staff who receive housing allowance and receive a W2. He claim that he received a bigger refund when he file as non minister. He think ministry should pay for his SE tax because employer should pay FICA if he claim not to be treated as a Pastor. Please advise.

[godmadeitgrow]

I think it's important to also recognize that many of us recognize and validate men and women as pastors, not just men alone (and this support of men and women as pastors is scripture-supported and biblically-celebrated). Thank you for providing this video for clergy tax understanding. God bless.

[pmaldona]

Thank you! This is my first year as a minister and I was really curious about the housing allowance and SS aspects. Question, on the reasonable housing expenses. Does that mean we need to itemize every housing expense? Or is the reasonable amount relate to some number based on where we live, or other calculation? When we first started working at the church we designated a certain amount based on the fact that we were expecting to have to make a home repair that would cost us 7, 000 to 10, 000. But in the end only cost us 2, 000. Do I need to adjust my housing allowance on my w-2 because it is higher than we actually spent on our mortgage and repairs for the year? Thank you!

[robertmelcher]

TO ALL READERS Did Jesus and or His apostles received a salary for preaching the Gospel?