![]() Pastors always have to pay SECA, but what about other church employees? Well, that depends on whether or not the church that employs them has opted out of paying payroll taxes. ![]() What About Non-Ministerial Church Employees? This article explains how that method of withholding taxes works. However, by filling out a Form W-4, a pastor can request withholding so that they don’t have to make quarterly payments or have an unpleasant surprise when filing their tax return. Churches are not required to withhold any taxes from a pastor’s salary, that responsibility is ultimately the pastor’s. There is one thing a church can do to help out the pastor. It will be subject to both income taxes and SECA. If a church tries to offset the SECA taxes by paying their pastor extra (commonly called a Social Security Offset), that extra money counts as additional income. Doing so will cause errors in Social Security Administration records that could affect future benefits. However, if a church pays FICA for their pastor, they are violating the law. Many churches feel bad about the extra payroll taxes that pastors have to pay and want to help. That tax applies to the parsonage and housing allowance as well, not just the wages subject to income tax. For 2023, that is 12.4% for Social Security taxes and 2.9% for Medicare taxes, for a total of 15.3%. Thus, all pastors have to pay both the employer and employee portion of their payroll taxes. Maybe because pastors are ultimately employed by God and God alone? (And the IRS hasn’t figured out how to get him to pay payroll taxes yet?) The internet has failed me on this one, so if you know why the IRS considers all ministers self-employed for payroll taxes, please let us know in the comments! All I know is that it’s the law. Either way, you have to pay your payroll taxes under SECA, as if you were self-employed. The only ministers who do not have dual tax status are those that the IRS views as independent contractors, people like traveling evangelists who do not receive wages from any specific church. You will pay income taxes as a common law employee, but you have to pay payroll taxes as if you were self-employed. ![]() If you work for a church, you have dual tax status. Any money you earn will be taxed under one of the two systems, but never both. SECA is the system for self-employed people, where they pay the entire tax since they are essentially both the employer and employee. The big difference between the two is who pays the taxes.įICA is the system for employed people, where the employee and employer each pay half of the taxes due. While FICA and SECA may sound like the names of some prophet’s twin sons, they are just two different ways for the government to collect Social Security and Medicare taxes. Let me start by introducing you to FICA and SECA. What Is The Difference Between FICA And SECA? But if you’re a church employee and not self-employed, why are you filling out a form for self-employment taxes? Allow me to enlighten you. Front and center, in the biggest, boldest print is the title for Schedule SE: Self-Employment Tax. If you haven’t opted out of Social Security, then you would have filed Schedule SE to calculate your Social Security and Medicare taxes, also called payroll taxes. The rest of you filed an extension and are still trying to get your papers together or get your tax preparer to answer your calls. Tax season has just come to an end and most of us are either eagerly awaiting a return or bemoaning how much we had to pay.
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