MUST HAVE REFERENCE GUIDE

Site Map or Site Search

CHURCH ACCOUNTING PACKAGE

Do I pay FICA on the portion of my salary that is not tax exempt?

by Brian
(Texas)

I currently took on a full time position at a church making a salary that exceeds my housing costs and therefore only a portion of my salary is considered Tax Exempt from Federal Withholding.

The question I have is that our CFO insisted that I was supposed to pay FICA tax on the whole amount of my salary. In past employment with churches I don't recall paying FICA at all but that's because my salary never exceeded my true housing cost.

Any advice is greatly appreciated.

Thank you!
Brian

Comments for Do I pay FICA on the portion of my salary that is not tax exempt?

Click here to add your own comments

Sep 23, 2015
 . . .portion of my salary that is not tax exempt"??
by: Lewis in NC

First, you must be a qualifying minister to receive a housing allowance.

Secondly the housing allowance must be approved in the proper way by the church board.

And thirdly if you do qualify for a housing allowance, no part of your ministerial salary is completely tax exempt.

Example: Say your salary is $80,000 with a properly approved housing allowance of $26,000; then you will be taxed on $54,000 of ministerial income (for federal and state income tax purposes) because the $26,000 is a qualified exclusion from those two taxes.

When you calculate your federal taxes, you will file a SE (Self-employment tax statement) on which you will pay Social Security taxes at a self-employment rate of 15.3% on the full $80,000. That is what your CFO is talking about.
Sep 23, 2015
 Very Good Example and Answer!
by: Vickey

Thank you, Lewis! That was a perfect and insightful answer to Brian's question. Your timely and helpful answers and comments on this site is very much appreciated! I pray God richly blesses you for the blessing you are to me and the readers of this site.

Brian, I just wanted to add a comment on the FICA statement. As an ordained minister, you are NOT under the FICA system. You will pay your taxes through the SECA system which Lewis outlined for you. See more on this page: https://www.freechurchaccounting.com/minister.html
Sep 23, 2015
 Thank you
by: Brian

Lewis,

Thank you for your help with this. I've been an ordained minister for many years now and do indeed qualify for a housing allowance. Your answer does help me! I certainly don't want to get in trouble with the IRS or anyone else for that matter so if I owe 15.3% on the total amount then it is what it is. I also didn't want to pay in more than I needed to so again your answer is very helpful. Thank you so very much!!!!
Blessings,
Brian
Sep 24, 2015
 This site is a blessing to church council members and organizers.
by: Lewis in NC

You and your readers are already a blessing to me, and you are welcome to what little I have done. The other writers have been a blessing as well. Thank you all.

Click here to add your own comments

Join in and write your own page! It's easy to do. How? Simply click here to return to IRS Form 4361.

If you want to DIY your payroll, I highly recommend you look at using Gusto! It is very user friendly and their support is awesome! Plus they know how to set up and maintain payrolls for churches and nonprofit organizations.

Note: I am a "partner" of Gusto, but as I have told you before ... I never recommend anything that we or our clients have not tried and love =)



Share this page:
Enjoy this page? Please pay it forward. Here's how...

Would you prefer to share this page with others by linking to it?

  1. Click on the HTML link code below.
  2. Copy and paste it, adding a note of your own, into your blog, a Web page, forums, a blog comment, your Facebook account, or anywhere that someone would find this page valuable.