Withholding on Housing

by Susan
(Kentucky)

Can the church elect to withhold FICA taxes on Housing and pay the employer portion on 941 quarterly tax forms and include the housing payments in the Social Security and Medicare Wages on the W-2?

Comments for Withholding on Housing

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Do NOT Withhold FICA from any part of a Minister's Compensation
by: Vickey

Nope…sorry…but the answer is a very big "NO". You cannot withhold FICA from ANY part of a minister’s compensation. See this post on that: https://www.freechurchaccounting.com/pastor-makes-request-for-withholdings.html

First and foremost….housing allowance payments are NOT reported in BOX 1 of a W-2. An eligible housing allowance amount is exempt from income taxes (everything reported in BOX 1 are subject to income taxes) . BUT that HA amount is subject to self-employment tax (if the minister has NOT been approved to opt out of SS).

Since ministers pay their social security through that SECA system… not under the FICA system…they can either make quarterly tax payments OR request the church withholds INCOME TAX from their compensation and enter enough of an EXTRA amount on line 6 of their W-4 to cover that additional SE Tax.

See more on that on this page:
https://www.freechurchaccounting.com/clergytax.html

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