Should Pastors Use Schedule C

To Report Wages From The Church?

 

An article addressing this issue is being prepared; however, the official answer given by IRS and confirmed by recent Supreme Court decisions is NO.  Pastors are generally considered to be employees of the Church for income tax purposes, and thus should receive a W-2 form to report their wages. 

The confusion comes because pastors are considered to be self employed for social security tax purposes.  This "Dual Status", has some advantages and disadvantages.

This dual status position can be greatly used to the Pastor's advantage, but there are three big IF's:

  1. IF Church Leaders (particularly the Treasurer) are willing to Cooperate, and
  2. IF the Pastor and the Church will do the necessary Planning, and
  3. IF the Pastor and the Church will keep the necessary documentation.

 

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