Is it a bad decision for the pastor to take a housing allowance due to the SE tax?

by Ann Fairchild

We chose the housing allowance because we thought it avoided payroll taxed for our church. It appears that it will now double our finacial responsibilities on that money since we will owe 15.3 % and the church pays nothing.

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Comments for Is it a bad decision for the pastor to take a housing allowance due to the SE tax?

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Jan 29, 2011
Taxes on a housing allowance
by: Vickey

If you took a regular salary, you would owe not only the self-employment tax, but income tax as well.

The IRS considers ordained ministers to have a “dual status” . Which means a minister is considered an employee for federal income tax purposes and self-employed for Social Security and Medicare purposes.See this page for more details.

So the church does not pay the self-employment (social security) tax or FICA on a minister....
although a church can set up a Social Security allowance up for a minister...just be aware that it would be taxable and need to be reported on a W-2.

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