How should church set up funds to help with the Pastor's self employment tax?

by Brenda Brown
(Newark, NJ)

We are a small church of about 100 members. We want to help pastor paying his self employment taxes, however not sure how if the church should get a seperate bank account to put these funds in or should we just let the pastor set up his own account so that he can send in the taxes to IRS each quarter?

Comments for How should church set up funds to help with the Pastor's self employment tax?

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Mar 26, 2012
paying pastor taxes
by: Anonymous

If you decide to do this you will have to add it as income on his W-2. See IRS Pub 15 series, lots of helpful info.

Feb 07, 2013
Social Security Tax Allowance
by: Vickey

The comment above is correct. It would be taxable income and need to be added to box 1 of his W-2 but...

we are facing this same question at my church. We want to set up a Social Security Allowance for our Pastor...but wondering if we can use a church check to make our absent-minded (but best Pastor in the world:-) estimated tax payments???

I couldn’t find anything that stated we couldn’t do it...but it does seem from what I have read that it would be better if we paid it directly to him and he (with much prodding and reminders) makes his own estimated tax payments.

Anyone care to chime in on the way they have set up a minister’s Social Security Tax Allowance?

Jan 13, 2015
Voluntary withholding
by: Matthew

Any money a church chooses to pay/set aside/deposit to assist their pastor in paying his self-employment taxes must be considered as additional income and reported so on the W2.

The easiest way to help an absent-minded pastor is to ask him to submit a W4 and choose to have the church voluntarily withhold taxes from his check (just like you would any other employee). He would need to estimate how much he would owe in taxes throughout the year, and you would simply divide that number by the number of paychecks. Otherwise, if he forgets to pay the quarterly amount and gets audited, he will be subject to penalty and interest by the IRS on those unpaid taxes.

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Join in and write your own page! It's easy to do. How? Simply click here to return to Minister's W-2.

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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