Housing Allowance excluded for Social Security Tax

I read on your page that if the minister opts out for social security (form 4361) this Housing Allowance income is also exempt from social security tax.

I read all the IRS rules and publication, and it clearly indicates that the exemption for social security is only on the minister's earnings and it DOES NOT apply to Housing allowance, and therefore social security tax will still need to be paid on the housing allowance even if opt out. Is this true? where in the IRS indicates that the Housing allowance is also free of Social Security

Can you explain. Thanks

Comments for Housing Allowance excluded for Social Security Tax

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Oct 16, 2015
Housing Allowance and Social Security Tax?
by: Anonymous

It is my understanding when you have an approved 4361 form to opt out of paying Social Security taxes then you pay no social security tax in; you also are opting out of social security benefits as well. If you have read something different, then you might want to confirm your findings with the Social Security Administration.

Oct 23, 2015
Housing Allowance excluded for Social Security Tax
by: Anonymous - MN

If your are able to confirm one way or the other regarding Housing Allowance being exempt or not if exempted from paying SET, please post here for others to know as well.

Oct 23, 2015

by: Vickey

Housing Allowance payments are subject to self-employment tax unless a minister has an approved 4361 form.

See this IRS site: https://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Minister-Audit-Technique-Guide#Self

Look under heading "Computing Self-Employment Tax".

"If an exemption from self-employment tax is not applied for, or is not granted, self-employment tax must be computed on ministerial earnings...

Include the following items in gross income for self-employment tax:

1.Salaries and fees for services, including offerings and honoraria received for marriages, funerals, baptisms, etc.. Include gifts which are considered income as discussed under the section on income.
2. Any housing allowance or utility allowances.
3. Fair Rental Value (FRV) of a parsonage, if provided, including the cost of utilities and furnishings provided."

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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 =)

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