Manage Payroll - Diocese of the West

Classifying Clergy as Employees for Income Tax Reporting Purposes
(Rev 10 Nov 05)

California Income Tax Withholding

The information that parish employees provide on their IRS Form W-4 is also used to calculate California Personal Income Tax (PIT) withholding for the priest.

Employees should complete an Employee Withholding Allowance Certificate (DE 4) if they want to specify the withholding amount for State purposes.

Housing Allowance

Click on the link to the left for information.

Car Allowance

(Rev 25 Feb 06)

The standard business mileage rate for the final four months of 2006 is 44.5 cents per mile. Some churches use the IRS-approved rate, while others use a rate that is either more than or less than the IRS rate.

If employees substantiate business miles with adequate records at least every 60 days and are reimbursed at the IRS approved rate, this is an "accountable" arrangement and the church does not report the reimbursements as income on the employee's W-2 form.

If employees substantiate business miles with adequate records at least every 60 days and are reimbursed at an amount MORE than the IRS approved rate, this arrangement is "accountable", but only up to the IRS approved rate.

If employees substantiate business miles with adequate records at least every 60 days and are reimbursed at an amount LESS than the IRS approved rate, this arrangement is "accountable". The church does not report any reimbursements on the employee's W-2 form

If an employee does not substantiate business miles with adequate records, or within every 60 days, then all reimbursements are added to the employee's W-2 form as income.

Diocesan Treasurer's Information: Paying the Priest

Diocesan Treasurer's Information:
Paying the Priest