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

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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!
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 Equitable Compensation Schedule for 2013 The minimum base compensation for 2013 is defined as the 2012 base compensation plus the Cost Of Living Adjustment (COLA) used by the federal government for the year we are in (that is, the Cost Of Living Adjustment announced last October for 2012 SSA, which was 3.6%). In addition there is a step increase of $700 for years of service for the first 8 steps. In keeping with our ongoing policy, the first step normally begins on January 1 following 18 months of service in the Minnesota Annual Conference. Base $34,624 1 35,324 2 36,024 3 36,724 4 37,424 5 38,124 6 38,824 7 39,524 8 40,224 In considering additional compensation beyond these steps noted above the Staff/Pastor–Parish Relations Committee is encouraged to consider the announced Cost Of Living Adjustment and merit increases in their mutual negotiation with the pastor. Further, this proposal does not intend to reduce current compensation levels recommended by Staff/Pastor Parish Relations Committees and approved by the Church/Charge Conference during the ongoing tenure of a pastoral appointment. Further, in recognition of the financial realities and to allow for flexibility in the appointment process, exceptions to above equitable compensation policy can be approved by a ¾ vote of the Cabinet and the voluntary consent of the pastor involved. Seniority for clergy from other denominations and communions who have had their orders recognized by the Minnesota Annual Conference shall have their seniority status established by the Cabinet before their first appointment in the Minnesota Annual Conference. The Cabinet is urged to consider years of service in the ministry exercised in other denominations, especially those coming from the churches of the Commission on Pan-Methodist Cooperation and Union and other member churches of the Churches Uniting in Christ (See 625.10 in The 2008 Book of Discipline). Each year the Equitable Compensation Team is to submit this legislation for Annual Conference action.
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Forms 5, 6, 7, 8a, and 8b (Clergy Compensation) in PDF Format

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