February 1, 2017
Under federal law, most ministers have dual tax status. Dual tax status means a minister is an employee of the church for federal income tax purposes, and self-employed for Social Security and Medicare taxes. For ministers, wages are reported two different ways:
Federal Income Tax = Employee status
Ministers who meet the Internal Revenue Service (IRS) definition of a minister are considered an employee of the church for federal income tax purposes.
It is possible, but much less common, for ministers to be designated as self-employed for federal income tax purposes. Before doing this, seek the advice of a local attorney or tax professional. These returns are more likely to be audited by the IRS because, often, they’re not in compliance.
Social Security and Medicare Tax = Self-Employed Status
For Social Security and Medicare tax reporting purposes, the majority of ministers should be classified as self-employed with respect to income for pastoral duties. This means they are generally subject to Self-Employment Contributions Act (SECA) tax. When this is the case:
What’s at stake?
It’s important to correct a withholding error. A minister is at risk for losing his or her dual tax status or housing allowance if it’s discovered that the ministry was withholding Social Security and Medicare taxes. If your church has withheld these taxes:
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Cyber security is increasingly crucial in our technologically advanced world. Scammers use many schemes when attempting to steal your data, but you can outsmart them by understanding their methods.
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Learn about the CARES Act and two loans for which ministries may be eligible, since Congress authorized additional funding April 23.
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The first Sunday in February is a big day for sports fans. In fact, many Americans view Super Bowl Sunday as a national holiday. Friends and families will gather this year to watch the big game, enjoy delicious snacks, and of course, critique the commercials that go along with game day.
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