@Mintipine wrote:
Thank you so much for your reply! It cleared up a lot of questions 🙂
As far as MHA amount goes for ministry #2, I was told that I am being recognized as minister of this ministry and MHA amount was communicated to the finance director via email and I was told that it would get brought up to the Board of Directors for the approval. And I started seeing it on my paystubs so I assumed that it got approved. I hope it is considered to be designated in advance and in writing. I am going to contact the finance department again to confirm about this and reflect correct MHA amounts on my W2 before filing.
And thank you for the suggestion on "pay SE tax on housing allowance only." to remedy withheld situation of lines 4 and 6 on W2. That makes perfect sense. But I do have one follow up question: based on my calculations, it seems that what they have withheld on lines 4 and 6 are 7.65% which indicates to me that they followed FICA standard. But my question is, can someone be receiving MHA as a minister and follow FICA standard as well? What happens if my organization made a mistake and reported my W2 under FICA standard when in turn it was supposed to follow SECA?
I am going to double check whether my organization reported me as a clergy or a non-clergy employee and whether they are covering other 7.65% of FICA, but if you could share some of your insight on religious wages and SECA/FICA, I would appreciate it! Thank you so much!
If the ministry withheld social security and medicare tax, they could only do that by withholding the 7.65% employee's share and matching it with the 7.65% employer's share on their quarterly form 941 filings and tax remittances to the IRS. Their forms wouldn't balance otherwise. Technically, they are in non-compliance with IRS regulations regarding clergy, but I doubt there would be any serious repercussions if the ministry was audited, because the right amount of tax got paid in the end.
"Designated in advance and in writing" would seem in your case to mean approval from the board of directors. Assuming they did approve and it's in their minutes, then your compensation paid after that date would be a valid housing allowance. If your W-2 reflects that you were paid as a lay person (your box 1, box 3 and box 5 all show your full wages and you have taxes in box 2, 4, and 6) then you should definitely clarify if your housing allowance was approved (and payroll didn't make the adjustment) or if something unexpected happened with your employment situation.
