If a part time staff member of the church receives an additional $40 a month as a designated cell phone allowance, what part of that allowance should be included in the employee's compensation on a W-2?

This is considered a tax-free fringe benefit that reimburses the employee for the church business use of the cell phone.

Many employees MUST have cell phones for their jobs and most companies have decided that, rather than force their employees to use a cell phone company they do NOT like or whose sevrice or coverage is marginal (at best), they simply reimburse them using this allowance.