Pastor already on disability ssi-does he have to pay taxes?

by Connie
(Kingsville, Texas)

The minister of my church was injured and lost his leg 7 years ago and is on social security disability.

Two years ago, the Lord called him to start a Cowboy Church here in Texas. We want to pay him for his services and maybe even a small housing allowance.

We cannot afford to provide a benefit package to include insurance or a pension. So it is both beneficial to him and us if he keeps his Medicaid.

What I am asking is how and what can we legally pay him without affecting his benefits or raising his tax burden?

Since his office is in his home (we hold church in an Equestrian Arena – no office there) does that make him a contract or 1099 and not a W-2 employee?

Also, final question – since he is on disability and has met all his SSI requirements prior to his injury, can he get out of paying self employment tax?

At present we would like to pay him $750 month for services and $400 for housing. We hope in the future these figures will grow. Thank you in advance for any help you can give us.

Answer

As far as what he can earn and not affect his SSI benefits, see this page, or have him contact his case worker and discuss it with him.

Whether or not he is considered an employee or contractor would be determined by looking up your state and federal labor laws. There are checklist and guidelines you can use to make this determination. It has more to do with how much control the church has over the minister than where the minister’s office is.

The only way I know of to get out of paying self employment tax is to file an IRS form 4361. But he must do it by the second year in which he earned more than $400 of ministerial income and it must be filed on the correct basis of religious belief. If approved by the IRS, only earnings from ministerial services are exempt from self-employment tax.

Hope this helps,



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