Self employement tax

by Liz
(Riverside, CA)

If housing allowance is exempt from tax and one can opt out of Social Security, why does the minister pay self employment tax? I read on post that the minister may end out paying double since the church doesn't pay the tax.

Please explain the benefit of housing allowance if they minister has to pay anyway?

Comments for Self employement tax

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Aug 01, 2015
Self-employment tax and housing allowance
by: Lewis in NC

If the minister chooses to pay social security taxes, he/she pays as a self-employed person. That is the way IRS looks at clergy--as self-employed.

Housing allowance is an approved amount (by the church) of estimated housing expenses (by the minister)that the minister is allowed to exclude from yearly total gross income before paying state INCOME tax (most states) and federal INCOME tax on clergy income. It is a tremendous tax savings to them if done correctly.

Aug 01, 2015
Opting out of Self-employment tax
by: D Fry

If a minister has opted out of paying social security tax AND has been granted an exemption by the IRS, they will not pay self-employment tax on the housing allowance. But if they are not exempt then the amount of self-employment tax (SECA) due will be 15.3%, which is the full amount of social security/medicare tax due, although half of that is paid by an employer. Many churches elect to pay the minister what would have been their share of the SECA tax just so that a minister does not pay "double".

Apr 09, 2016
self employment tax
by: Anonymous

Can you tell me how a minister can become exempt from paying self employment tax and how that will affect us.

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