Forms 5, 6, 7, 8a, and 8b (Clergy Compensation) in PDF Format

Minnesota Annual Conference of The United Methodist Church
Church Conference Forms
122 W. Franklin Ave. #400, Minneapolis, MN 55404
612-870-0058; info@minnesotaumc.org
The value of certain types of health care coverage need not be reported on employees’ Form W-2,
including:
coverage under a self-insured church plan; (the Minnesota Conference’s MAC Plan)
Taxable Income and W-2s: Not all the items on Form 5 are considered taxable income. The housing
allowance, furnishing allowance, and fair market value of a parsonage provided to a pastor are not
taxable income for income tax purposes and are not included on a W-2. These amounts are subject to
social security tax (SECA) which the clergy reports and pays. Health and pension benefits are not subject
to either income tax or social security tax. For guidance on completing W-2s, please consult the most
recent Tax Packet & Tax Information provided by the General Council on Finance and Administration. It
is available on their web site (www.gcfa.org).
Other Pastoral Compensation Information:
Form 6 Accountable Reimbursements
A pastor must submit a receipt, invoice, or mileage log within a reasonable time for reimbursement of
these items. The church sets an annual budget for continuing education, mileage, and professional
expenses, meeting the conference minimum guidelines and the amounts are paid out when expended
or invoiced. They cannot be paid as a monthly allowance. Nor can any unused portion of the fund be
paid out to the pastor at the end of the year. To do so may cause the entire reimbursement plan to be
taxable. Neither can an accountable reimbursement plan be set up as a salary reduction. These are
funds provided in addition to the salary. Mileage is paid at the IRS rate, and does not include commuting
between the home/parsonage and church.
Form 7 Multiple Church Compensation and Other Expense Breakdown
Using the totals from Forms 5 and 6. List the separate churches in the charge and their corresponding
percent of compensation and expenses then calculate each line item. Be sure to add both across and
down to verify totals.
Average Compensation
The Denominational Average Compensation (DAC) for 2013 is $63,867. The Conference Average
Compensation (CAC) for 2013 is $59,646. These numbers are calculated by the General Board of Pension
and Health Benefits and are based on cash salary plus housing allowance or parsonage value (25 percent
of salary).
Social Security Tax
Clergy are in the unique position of paying the employer and employee share of the social security tax
on both their salary and housing. Some churches, in recognition of that, seek to give their pastor a social
security allowance. That is considered taxable income and must be reported on the W-2. A clergy may
choose to have voluntary withholding of income taxes from their paycheck, including an extra amount
withheld to cover the amount due in social security tax, and the church would send the tax withholdings
to the IRS with their other payroll taxes and report it on the clergy’s W-2. However, the church cannot
directly pay the employer share of FICA/SECA to the IRS for the clergy.
If you need assistance in setting your pastor’s compensation or completing these forms, please contact
your district office.
Forms 5, 6, and 7 must be in the district office by December 1, 2012!