Clergy request to withhold both employer and employee FICA

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 salaries.

Our new minister has requested that both the employee's portion and employer's portion of his social security taxes be withheld from his salary.

His comment is that he has done this for twenty years. Everything we have read has clearly stated that such taxes must not be withheld from a minister's salary and that there is a difference in the application of FICA and SECA.

We would appreciate your comments on this most unusual situation.

vickey's reply

You are correct. See this post regarding FICA taxes for links to resources you can give your pastor to show why you cannot withhold and match FICA tax.

If you have a denominational association office in your area, you might be able to contact someone there who can confirm this for your pastor.

Hope this helps,

Church Accounting Package

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How We Do It
by: Pastor Ware

I have been preparing my taxes in the following manner for over 15 years. I live in a parsonage provided by the church and recieve a small salary each month. I am subject to self-employment taxes on the salary, which are the full amount of the fica and medicare tax rates. After calcualating the amount of the SE Taxes I owe, I authorized the church to withhold additional income taxes to cover the amount from my check. On my w-2 at the end of the year, It will show my Income tax withholding which will credit against SE tax owing. The pasrsonage allowance is not recorded as income and only recorded as a note, however, I must calculate the SE tax owing on the allowance and include it in my witholding calcualtions in order to avoid owing taxes at the end of the year(after credits and deductions)

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