apply to ministers who are always self-employed for social security, which means they are responsible for the full 15.3 percent SECA tax and therefore the church cannot send that tax money to the IRS. Our resources help churches and pastors make the right choice in regards to important tax considerations.
They are almost always employees for federal and state taxes; therefore, they receive a W-2 from the church. This dual tax status is often very confusing to ministers and the churches they serve. Some accountants and CPAs who do not understand this unique tax status of ministers and often give ministers and churches incorrect information.
Ministers are also exempt from federal and state withholding; therefore, most ministers file quarterly. Ministers may request voluntary withholding by the employing church, but they must complete a W-4 and indicate how much tax money for the church to withhold and send to the IRS. The church should never send social security tax dollars to the IRS.
Unfortunately, many churches use the “lump sum” pay package approach to compensate their staff. A “lump sum” pay package means the church identifies the total pay and then invites the employee to indicate how they wish to receive the money. Please note the following “dangers” inherit in the lump sum approach:
- A lump sum is misleading to the staff person and the congregation
- Staff may choose cash over insurance protection and retirement participation
- Staff may pay unnecessary taxes
- Church may incur financial burden
- Depending on how it is structured and administered it may not meet the IRS tax code
Ministers' Tax Issues - this brochure explains the various tax issues unique to minister
Ministers' Tax Guide - detailed tax info including federal reporting requirements for churches
Ministers' Housing Allowance - churches are able to designate a portion of the minister’s salary as a housing allowance per specific IRS guidelines
Financial Checklist for Ministers - this brochure highlights areas for ministers to be informed concerning compensation
2014 SBC Church Compensation Survey - this survey assists ministers and lay leaders as they evaluate equitable compensation for staff
2015 IRS Standard Mileage Reimbursement Rate - stay up to date with the current IRS Standard Mileage Reimbursement Rate for ministry-related expenses
2401 Cedar Springs Road
Dallas, Texas 75201-1498
United States Government Resources
Internal Revenue Service
Social Security Administration
- Full Retirement Age for Social Security
- Earnings Limit for Taking Social Security before Full Retirement Age