Estimated Taxes for Ministers

See below how to figure estimated taxes for ministers.

Churches are not required to withhold income taxes from a minister’s paycheck. And...because ministers are considered self-employed for Social Security purposes...church also does not withhold or match Social Security and Medicare (FICA) taxes for a minister.

How to Figure Estimated Taxes for Ministers:

Estimated Taxes for Ministers

Ministers should prepay their income taxes and self-employment taxes by using an IRS and state estimated tax form, unless they have entered into a voluntary withholding arrangement with their church (more on this later).

Estimated taxes for ministers must be paid in quarterly installments. You don’t have to pay the same amount each time. For example, if your income or deductions increase unexpectedly, you should refigure your estimated tax liability for the year and amend your remaining quarterly payments accordingly.

First of all, do you even have to pay estimated taxes?

Well, if you expect to owe at least $1000 in federal taxes after subtracting your withholding and credits, you are probably going to have to make some estimated tax payments.

Next figure your estimated taxes for ministers using the Form 1040-ES worksheet(link below).

Then pay one-fourth of your total estimated taxes for the year in each of four quarterly installments as follows:

Income Received for the Period Estimated Tax Due Date
January 1 through March 31 April 15
April 1 through May 31 June 15
June 1 through August 31 September 15
September 1 through December 31 January 15 of next year

If the due date for making an estimated tax payment falls on a Saturday, Sunday or legal holiday, the payment will be on time if you make it on the next day that is not a Saturday, Sunday, or legal holiday.

Finally, you will need to file your federal estimated taxes for ministers by using IRS estimated tax form 1040-ES. This form includes four numbered payment vouchers to send in with your payment and also instructions on how to fill out the IRS estimated tax form and where to send.

Once you have made your first payment, the IRS will send you preprinted vouchers to start using.

Don’t forget to make state estimated taxes for ministers also...unless you live in one of the states that don’t have income taxes. 

Tips:

  • Make your check payable to "United States Treasury" and be sure to put “ 20XX Form 1040-ES” and your Social Security Number on your check or money order.
  • Enter the amount owed on the right side of your check like this: $000.00 without any dashes or lines.
  • Enclose, but do not staple or attach, your payment with the estimated tax payment voucher.
  • Make copies of everything before you send in your payments and file for future reference in filing your annual tax return.
  • Check into making your estimated tax payments via the Electronic Federal Tax Payment System, or EFTPS.
  • Try making monthly payments. With EFTPS, you can set up recurring monthly payments that are smaller and more manageable than quarterly payments.
  • Avoid penalties for underpaying your estimated taxes. Figure as close as you can and make your estimated tax payments in timely manner.
  • Ministers who report their income taxes as employees can request that their employing church voluntarily withhold income taxes from their wages. Simply furnish the church with a completed W-4 (withholding allowance certificate).

Since ministers are not employees for Social Security purposes, the church must not withhold the employee's share of Social Security and Medicare taxes.

However, ministers can request on Form W-4 (line 6) that an additional amount of income tax be withheld to cover their estimated self-employment tax liability for the year.

The excess income tax withheld is a credit that can be applied against the minister's self-employment tax liability. (Excerpt from “How Ministers Pay Their Taxes” by Richard Hammer)

Church Accounting Package

A set of 4 ebooks that cover the following topics...

  • Fund Accounting Examples and Explanations
  • Setting up a fund accounting system
  • Donation management
  • Minister compensation and taxes
  • Internal controls and staff reimbursements
  • Much more - Click here for details

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