artp Posted January 21, 2014 Report Share Posted January 21, 2014 Church reimburses the medical insurance premiums that are deducted from the pastor's wife's salary. She is employed as a nurse for a local hospital. Since the medical insurance premiums for the family medical coverage are deducted on a pre-tax basis on her wages, the premium reimbursement payments that the church pays to the pastor would seem to be taxable income to him on their joint return. Pastor is a dual status filer (no 4361 exemption) so what is the proper way to report the premium reimbursement? Add the reimbursement to his church salary and report the total on his W-2 in Box 1 only ? Pastor has no other self-employment income so there is no Schedule C to be filed. His W-2 salary is included in the clergy income worksheets so the insurance reimbursement would also flow through as taxable income for SE tax purposes. Does anyone have an alternative way to report this item or a suggestion for better way to structure this benefit? Quote Link to comment Share on other sites More sharing options...
Mr. Pencil Posted January 22, 2014 Report Share Posted January 22, 2014 Add the reimbursement to his church salary and report the total on his W-2 in Box 1 only ? Yep, and flows through to Schedule SE as you say. Subject to withholding too, just like any other taxable fringe benefit. Quote Link to comment Share on other sites More sharing options...
MAMalody Posted January 22, 2014 Report Share Posted January 22, 2014 Hmmm. It would be considered the pastors income and subject to SE tax, yes. It would not be subject to withholding unless the pastor requests it. That's how I remember it. Quote Link to comment Share on other sites More sharing options...
artp Posted January 29, 2014 Author Report Share Posted January 29, 2014 Thanks for the feedback. I apologize for not acknowledging sooner. Quote Link to comment Share on other sites More sharing options...
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