My church filed my W-2 reporting a partial-year's FICA withholding. Is it accurate that I need to pay SECA on the entirety of box 1 & box 14 minus box 3 & 5?

[stylixg]

I have the following:

Box 1-$27375.29

Box 2- $1047.00

Boxes 3&5 - &12842.74

Box 4- $796.25

Box 6- 186.22

Box 14 (Parsonage) $29033.52

Again, I'm assuming that I need to pay SE tax on whatever was not reported/taxed in boxes 3/5?  Or is the whole thing a boondoggle and I need to request an amended W-2 (and the church amending their 941s)?

[Opus 17]

What happened?  Did the church get their bookkeeping screwed up, or did you transition from a non-pastor to a pastoral role in mid-year?

[Opus 17]

Also, is it accurate that your taxable compensation was $27K and the value of your parsonage was $29K?

[stylixg]

Yes, our bookkeeping is done by volunteers and it was discovered that we were filling improperly, so it was changed at turn of fiscal year.

And, yes, the above is accurate.

[Opus 17]

Turbotax is not designed to handle this situation.  There are basically 2 ways to use the program to make it work, or you will need to see a tax professional this year (who understands clergy, not all do.)  Also, check with your denomination. They may have recommendations for tax providers and may offer training or guidance for your Treasurer and bookkeeping staff.  This is also a good personal resource. http://www.ecfa.org/PDF/2017-Ministers'-Taxes-Made-Easy.pdf

Using Turbotax installed on your own computer, you can fix this problem if you are willing to make a manual override to one of the forms.  Overrides void the accuracy guarantee and prevent e-filing, you will need to print and mail your return.  What you would do is enter the W-2, check the box for "religious wages", and then then check the box for "pay SE tax on housing allowance only."  Then click the Forms icon at the top of the page to switch to Forms mode, and look for "Sch SE Adj Wks" (Schedule SE adjustment worksheet).  I believe that line 5a is clergy wages subject to SE tax and line 5b is your housing allowance.  You will manually enter on line 5a, the amount of your wages that was not subject to FICA tax (it looks to be $14,533 from your numbers).  Line 5a may accept the manual entry without an override, but it will probably require an override -- you won't be able to directly enter numbers unless you click on the field and then select "override" from the Forms menu.

This will get you the correct result, but will prevent e-filing.

The other possible solution is to split the W-2 into 2 separate W-2s; one for the time you had FICA withheld and one for the time you were not.  Enter your wages as if you had two separate W-2s.  Don't check the religious wages box for the W-2 with FICA.  For the W-2 without FICA, check the box for religious wages, check the box for "pay SE tax on both housing and wages" and enter the full amount of your housing allowance.

The concern here is that Turbotax may show an error if you have 2 W-2s from the same employer.  And, entering 2 W-2s, neither of which matches your actual W-2, may lead to you getting a mismatch letter from the IRS or your state asking you to explain.

Personally I would do the override method.  If you're not comfortable with either method you will need to see a professional this season.

[stylixg]

Opus, thanks.  I had already done the override, but not being a tax professional I was reticent to just bully-through on an assumption, lest the old addage prove true.

[priam_agrivar]

I have a similar situation with my wife. I did the Sch SE Adj Wks. Does this require any more explanation since the w-2 will not match this number? Do I have put a note in to let them know that they became clergy mid-year and it's all just in one w-2 combined?

[DianeW777]

No, it will not require an explanation until and unless the IRS or state request it, and even if they do, you have taken the correct action to report the income and pay any personal income tax as well as self employment tax required. 

Don't be afraid to make sure the church does report the correct income and withholding on the W-2 for 2024.  Many get confused about how it should be handled.

• A pastor is a common law employee of the church.  This means they do NOT withhold any social security or medicare taxes.  If they choose to help you out by taking additional withholding to help you cover that they can add it to any other federal withholding on the W-2. 
• No figures should be in boxes 3, 4, 5, or 6. 
• Wages in box 1 and federal withholding in box 2.

@priam_agrivar