FICA Taxes

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 Sec) taxes for ministers for some time now and wonder if you could help me.

We have two ministers. I had read information that your not to take FICA from ministers/bishops paychecks. It said they were to pay them themselves.

When I spoke to a tax advisor they said initially it appeared that we were exempt from social security and medicare taxes, however, that appears only to be eligible for clergy who take a vow in poverty. This was not the case for us.

So we were told to continue deducting these taxes from their checks. I also called IRS and was told ministers are only exempt if they complete form 4361 & 4029 and are approved by the IRS.

Otherwise, we have to take out FICA taxes like a regular employee. Now I am more confused. I see in your information it stated ministers are considered dual employees and not to withhold any FICA tax. Can you clarify this issue for me?

Then there is the question about ministers paying their own self employment tax? This is still confusing. Any help you can give is appreciated.

vickey's reply

I respectfully disagree. But don’t take my word for it. Read the IRS’s Pub 517: Social Security and Other Information for Members of the Clergy and Religious Workers

It states...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.

If you are a minister of a church, your earnings for the services you perform in your capacity as a minister are subject to SE tax unless you have requested and received an exemption. These earnings are subject to SE tax whether you are an employee of your church or a self-employed person under the common law rules.

If you are a minister with an approved copy of Form 4361, you are exempt from paying any social security tax.

When you call the IRS, the agent you talk to is not always familiar with minister and church issues.

So do your own research.

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FICA Taxes
by: Anonymous

Vickey is absolutely correct. Ministers are essentially considered as self-employed when paying taxes.

While we would hope that the answers that we get from the IRS are correct, this isn't always the case. I've found that the best way to clarify an answer is to consult with a person who does and understands clergy taxes. Many tax preparers think they do, but really don't. If you have a denomniational association office in your area, someone from there can sometimes point you to a good preparer.

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