Self Employment Tax Matched

by Jake
(Newport News, VA)

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, they are entitled to a refund.

It seems to me that we should limit the amount that they have withheld and that we match. Otherwise, if they receive a refund, the church has paid more than their fair share. I have asked our pastors to contact their accountants to determine the amount of SE tax that should be remitted on a quarterly basis so that they will essentially break-even in regards to SE tax owed or to be refunded.

Does this make sense? At the same time, if we have withheld it, I would think we need to remit it or run into a mess in having to recalculate paychecks and refund amount.

Also, I have been told that we don't really need to submit SE tax for clergy. Is this true? I am not looking to eliminate any benefits that were established for the pastoral staff, but we get into a financial crunch when the quarterly remittance is to be sent in.

Thanks for any insights you can provide.

Answer

It is very nice that you do that for your pastors; however, all of the estimated tax payments (I am assuming that is what you are referring to) that you send in for them including the amount the church matches is taxable income to your pastors.

So it would not matter is any of it was refunded back to them. It is their money.

And no...a church is not required to submit estimated tax payments for their ministers, nor are they required to withhold and match FICA (Social Security and Medicare tax). Ministers are considered self-employed when it comes to self-employment tax (Social Security) and are responsible for paying their SE tax themselves.

Tip: If you continue to pay their estimated tax payments, I would not do it with a church check. It needs to be their personal check. You could just pay them a quarterly bonus and with it they would have the choice of paying their quarterly estimated taxes.

Also, they are probably not going to be happy about this, so you may advise them not to take my word for it but to consult a knowledgeable CPA regarding this issue.

Hope this help,



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