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Is Your Minister an Employee or Self-Employed?

Minister or Pastor Employment Status: Below are some important facts to consider when determining if your pastor is an employee of your church or self-employed.

minister employment status

One of the frequently asked questions on this site is whether to issue the pastor a W-2 or 1099.

The answer always lies in determining if the minister is an employee of the church or considered self-employed.

A long time ago...all pastors and ministers were considered self-employed; however, in the mid 1980’s the IRS decided to declare ministers “employees” of the church. Most tax professionals will tell you unless the pastor has full control over the church...they should be considered an employee of the church and be issued a W-2 to report compensation.

Now remember...even though they are “employee” of the church...the IRS considers ordained ministers to have a “dual status” . Which means a minister is considered an employee for federal income tax purposes and self-employed for Social Security and Medicare purposes.

That brings us to another frequently asked question: FICA or SECA?

A church should not withhold and match Social Security and Medicare taxes (FICA) from a minister's wages. A minister pays his Social Security and Medicare taxes under the SECA system.

Note: Social security and Medicare taxes are collected under two systems. Under the Self-Employment Contributions Act (SECA), the self-employed person pays all the taxes. Under the Insurance Contributions Act (FICA), the employee and the employer each pay half of the taxes. No earnings are subject to both systems.

Also see this page on fringe benefits for pastors.

Q & A Section

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Please take a moment to skim the following posts and see if there is a question or comment that you yourself have faced and know the answer to.

Questions and Comments on Ministers Employment Status

Do you have a question or comment about minister or pastor employment status? Share it!

Enter Your Main Question or Thought for the Title

Archive of Minister Employee Questions (& Answers)

Click below to see contributions from other visitors to this page...

(Click on the read or post comment on the bottom of the question to see the answers and/or add your own comments or answers!)

Associate Pastors and Housing Allowance  starstarstarstarstar
We have an associate pastor who reports to the Pastor as his boss. Can the associate receive a housing allowance?

Currently we give a housing allowance ...

1099-Misc and W-2  starstarstarstarstar
Can a pastor that is issued a W-2 for his/her church duties also be issued a 1099-Misc for special events like marriages if performing the special event ...

Issued a 1099-MISC instead of W-2--what now?  starstarstarstarstar
I've been issued a 1099-MISC for my work as pastor of a church, but I'm reading here that I should have received a W-2. So how do I file my taxes, and ...

SE Tax & Housing Allowance  starstarstarstarstar
I am the Associate Pastor at our church. Although I meet the five criteria of a "minister", our church has treated me as an employee rather than self-...

Pastor's compensation is not even enough for his rent. Should he get a 1099?  starstarstarstarstar
We're a small church and could not even pay our pastor enough for his apartment rental. The church's compensation is his only source of income. Should ...

Small Church Pastor Employee or Self Employed  starstarstarstarstar
If a small church has no employees other than the pastor, is the pastor considered Self Employed or an employee? The person who does taxes for our pastor ...

Tax Status for corporate officer of a religious orginization  starstarstarstarstar
Under common law rules it states that the officer of a corporation is a employee. Is this true for a religious organization also? and if so, do you withhold ...

1099-misc issued to a self employed minister  starstarstarstarstar
If a minister has full control of a church and is considered self employed, does the church issue him a 1099-misc?

Can I choose between w-2 or 1099  starstarstarstarstar
I am a youth pastor in Missouri and our church is switching from the "self employed 1099" stuff to w-2. I have debating whether or not to be ordained with ...

Federal Taxes  starstarstarstarstar
I'm the Director of Student Ministry at a United Methodist Church and I'm not currently an ordained minister.

An older pastor I know mentioned that ...

Employee or nonemployee  starstarstarstarstar
The church pay him weekly, but he does not considered as an employee of the church because he does not want the church to match his payroll tax, and he ...

How do report half the SS tax paid by the church?  starstarstarstarstar
Where, on the 1040 form, should I report the half of the SS tax that the church paid on my behalf? Misc income?

[Know the answer? Face the same situation?...

Clergy request to withhold both employer and employee FICA  starstarstarstarstar
We are volunteer business managers for our church and as such have responsibility for preparation of W-2's and all other related aspects of the staff's ...

Half of Fica paid by the church in behalf of self employed clergy.   starstarstarstarstar
How do you file a tax return on behalf of self employed clergy for whom the church paid 50% of the total FICA taxes (thus 7.65% of income)?

1099 MISC vs W-2  starstarstarstarstar
My husband is a youth pastor at a church and for the last 3 years has received a 1099-MISC.

This past year we have a new financial secretary and she ...

FICA Taxes  starstarstarstarstar
I am the secretary for our small congregation. I did not know anything about taxes and learned as I went along. I have been confused about FICA(Med/Soc ...

Church Withholding Social Security Tax  starstarstarstarstar
Question reagrding a church withholding a FICA tax from a minister's paycheck:

I have had a church ask me to print their W-2's from their information....

minister severence pay  Not rated yet
Our minister resigned in 2011 and received a non-taxed severance packaged. Does he receive a 1099 misc form since severance pay is taxable?

Do I have to pay Social Security Quarterly?  Not rated yet
I'm a new bi-vocational minister. My question(s) is(are) simply: do I have to pay social security and medicare taxes quarterly or can I pay it once a year?...

Self Employment Tax   Not rated yet
I work for a church and I have the 15.3% withheld every check. I use turbo tax to file my taxes. Do I need to pay the self employment tax when filing my ...

Medicare and Social Security withheld from wages.  Not rated yet
I just realized that the church withheld Medicare and Social Security taxes all year for my husband (a new minister). The w-2 reflects this as well as ...

Self Employment Tax Matched  Not rated yet
We withhold and match the amount of our pastor's and assistant pastor's SE tax. This is remitted on a quarterly basis. If the total due has been overpaid,...

Monthly stipend for a pastor  Not rated yet
Does the church need to report to IRS the total stipend paid to the pastor. If the pastor is the incorporator and President of a church is he considered ...

Should a Pastor be Given a 1099 or a W-2?  Not rated yet
I was wondering if a pastor's income should be reported on a 1099 or a W-2? He is the only "employee" of the church. All others are volunteers.

Thanks
...

Children's Ministry Leader and Payroll Taxes?  Not rated yet
Question regarding Children's Ministry leader and payroll taxes:

I am a bookkeeper for a small church and we are hiring a children's ministry director ...

Clergy Social Security  Not rated yet
Can the church or should the church pay directly to the clergy half of the social security tax?

Answer

Yes you can...if the church is financially ...

Social Security Taxes - When to Pay?  Not rated yet
When do you pay Social security taxes? Is it at the end of the year, or do you have to pay monthly/quarterly as a full-time minister/pastor?


Answer ...



The comments above are for general information purposes only and do not constitute legal or other professional advice on any subject matter. See full disclaimer.

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