Half of Fica paid by the church in behalf of self employed clergy.

by eileen
(va )

How do you file a tax return on behalf of self employed clergy for whom the church paid 50% of the total FICA taxes (thus 7.65% of income)?

Comments for Half of Fica paid by the church in behalf of self employed clergy.

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May 24, 2010

Half of Fica paid by the church
by: Debbie

You have to add the 50% you paid for him to his income on his W-2 or 1099.

Apr 09, 2011

Help
by: Anonymous

Can you please give an example. Does the 1/2 Self-Employment tax subject to self-employment tax. Then it becomes a circle and we don't get anywhere. Help.

Nov 03, 2012

How to gross up Pastor's Salary to cover half the SE tax
by: Anonymous

IF the Church is going to pay half the SE tax, payment will itself be considered taxable income and will be subject to further SE tax. If the church wants to pay half the tax, then the pastor's salary must be grossed up using the following formula:

Grossed up Salary = (base salary)/(1-.5*SE TAX rate).

For example, if the base salary is $36,000, and the church wants to pay half of the SE tax, which is 15.3% in most years, then the church should pay the paster $38,982.13, found as follows:

$36,000/(1-.5*.153)=$36,000/(1-.0765)=36,000/.9235
=$38,982.13.

So the pastor will receive compensation of $38,982.13. Half of the SE tax is .0765 of that amount, or .0765*$38,982.13=$2982.13. Subtracting the $2,982.13 from the $38,982.13 gives $36,000 after the "church's share" of the SE Tax.

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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 =)

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