Church workers, like employees of any organization, usually receive a “pay stub” each time they are compensated. The pay stub may be a physical attachment to a paper paycheck, or it may be an electronic form if payment is made by direct deposit.

This document may seem similar to a piece of junk mail after a while. It comes every few weeks. It always looks the same. The details of it are complex. Certainly, it is human nature to just ignore documents like pay stubs. They seem like white noise in our otherwise colorful lives. After all, it is the money itself we desire, not the document that comes with it!

While the pay stub may seem like a technical document full of bland details, the reality is that it contains many key provisions that help ensure you understand how you are compensated, and that you are being compensated properly.

In light of this, it is a good practice to pause from time to time and review the pay stub to ensure that your payroll is set up accurately, and to understand the details of how you are being paid. An occasional few minutes to review this document can allow you to keep in touch with the details and, more importantly, nip any issues in the bud before they become overly cumbersome to correct.  

Here are a few details to look for when reviewing your pay stub.

First, if you receive a clergy housing allowance, is it accurately accounted for? Is there a breakdown between the amount of your pay that is for salary and that the amount that is for housing allowance? Does the figure reflected for housing allowance match your annual housing allowance designation when multiplied by the number of annual pay periods utilized by your employer?

Second, does the amount of total compensation appear accurate when compared to your annual compensation package, if you multiply the current amount by the proper number of annual pay periods?

Third, does your pay stub accurately reflect your understanding of how you and your employer have elected to handle income taxes? This is particularly important if you are a minister. In other words, if you have elected to have federal and state taxes withheld from your paychecks as a ministry employee, are those taxes being withheld? Or, on the other hand, if you make quarterly estimated tax payments instead of having taxes withheld, does everything appear consistent with that practice? That would mean that you see no taxes being withheld. Further, have you remembered to make the appropriate quarterly estimated federal and state tax payments yourself?

There is also the issue of local taxes, which vary greatly depending on the municipality in which you live and work. Have you accounted for local taxes, either through payroll withholdings or by making direct payments on your own?

Finally, are any withholdings for employee benefits accurate? This may include retirement contributions, medical benefits, or other insurance.

Clergy Financial Resources serves as a resource for clients to help analyze the complexity of clergy tax law, church payroll & HR issues. Our professionals are committed to helping clients stay informed about tax news, developments and trends in various specialty areas.

This article is intended to provide readers with guidance in tax matters. The article does not constitute, and should not be treated as professional advice regarding the use of any particular tax technique. Every effort has been made to assure the accuracy of the information. Clergy Financial Resources and the author do not assume responsibility for any individual’s reliance upon the information provided in the article. Readers should independently verify all information before applying it to a particular fact situation, and should independently determine the impact of any particular tax planning technique. If you are seeking legal advice, you are encouraged to consult an attorney.

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