February 21, 2011

Form W-2 Example

Question:

The church pays me as a part-time pastor $1,000 a month. $500 of that was designated as "housing" in a business meeting. How should they report that?

Answer:

Assuming a full-year's compensation, $6,000 is reported in Box 1 of Form W-2 as taxable compensation. I recommend that the $6,000 paid as non-taxable housing allowance be reported in Box 14. This reports to you the amount that you must document for housing allowance purposes (see other blog entries for a review of these rules).

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