It's Time for Clergy W-2's!
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2023 W-2's are due to all employees by January 31, 2024. Information to help with preparing IRS Form W-2 for clergy, which can be complicated, can be found on the here. Use the worksheet and example as a guide for preparing your pastor's W-2. This sample spreadsheet and W-2 is just that, a sample. Your fact set may include more or fewer items to report (for example, moving expenses that are now taxable if paid or reimbursed are not in the sample).

Highlights and guidance for 2023 W-2 preparation:

  • Report Housing Exclusion resolutions amounts only as information in Box 14. Do not report cash housing allowance.
  • Do not report the cost of the conference health insurance policy in Box 12.
  • W-2 Boxes 3-6 should be blank for clergy; churches should never withhold for Social Security or Medicare for credentialed clergy.
  • Moving expenses paid by churches directly to moving companies or via reimbursement to clergy are taxable and must be reported as income and included in box 1 (see the moving expense section of IRS instructions completing W-2's here).
  • If your pastor received health insurance through the conference plan (Anthem) they received a contribution to their HSA account that should be reported. Clergy on single plans received $500 in January and July 2023 for a total of $1,000. Clergy on Family-2 or Family-3 plans received $1,000 in January and July 2023 for a total of $2,000. If two churches share in the cost of health insurance, adjust accordingly.
  • All full-time clergy and some ¾-time clergy receive a $50,000 death benefit through a conference plan. This is in addition to $50,000 available through the denominational plan (CPP). The cost of group life insurance over $50,000 is taxable. To calculate the amount, click here IRS Publication 15-B and go to page 14. Using your clergy’s age, take the corresponding cost and multiply by 50. That is the monthly amount. Multiply by 12 for the yearly total. This is letter “H” on the fact pattern example W-2.

Note: If your pastor is not on the conference health insurance plan and your church has not established its own qualified plan, direct payments to clergy to offset the cost of health insurance (for example, on a spouse or other employer plan) are taxable income.

The resources referenced here and on the conference website should answer most of your questions. However, contact your payroll provider, a CPA, or tax preparer if you have technical questions.