Pastor salary and withholding taxes

by DIane

We are a small church (less than 50 members).

Our pastor recently told me that he wants us to withhold taxes on his salary for 2015.

The church has no employees and in the past we have given the pastor a 1099-Misc form.

He has no housing allowance and no car allowance.

What is required of the church?

Comments for Pastor salary and withholding taxes

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Feb 19, 2015
Pastor salary and withholding taxes. . .
by: Lewis in NC

Click on the link to the left and read "Minister Taxes" scroll down and click on "Clergy(Ministers) Taxes" to begin to understand your question. You will discover that a W-2 is required for your minister since he/she is employed by the church. The minister can choose to have federal and state income taxes withheld from his/her salary or he/she can choose to do estimated taxes yearly on his/her own. The church is NOT to withhold FICA and Medicare taxes; he/she files a SE (self-employment--yes, he/she is a dual status tax payer) form when doing yearly taxes for those tax payments. When filing the SE form he/she adds the housing allowance exclusion back to Box 1 W-2 earning when figuring the self-employment taxes.

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Join in and write your own page! It's easy to do. How? Simply click here to return to Clergy Tax Q&A.

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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