Church

Self-employment tax Clergy are not eligible to have FICA taxes withheld from their church compensation. In lieu of FICA taxes, clergy pay self-employment tax, also known as Self-Employment Contributions Act tax (SECA). Reimbursements from an employer of SECA are taxable as wages. However, even though...

12 January, 2022

While ministers are employees for federal income tax reporting purposes, they are self-employed for Social Security purposes with respect to services they perform in the exercise of their ministry. This means that they must pay both the employee and the employer share of social security tax...

05 January, 2022

Like other corporate entities, churches encounter business activities that must be completed just before, or soon after, the end of the calendar year. Now is the time to make plans for these various tasks. The questions that follow can be used as a checklist for...

29 December, 2021

Would your budget survive if you suddenly had to pay your volunteers for their time? Most nonprofits would answer with a resounding "no." But financial gain isn't the reason your volunteers show up to help. They are actively supportive because they believe in your organization's...

22 December, 2021

The answer is “both.” Ministers have what is commonly referred to as “dual tax status.” For federal income tax purposes, a minister is generally treated as a common-law employee. For payments into Social Security, the minister is always self-employed. This is an IRS regulation and...

15 December, 2021

If your church pays musicians to perform during services or other events, you’ll need to determine if they are employees or independent contractors. The biggest distinction between W-2 employees and 1099 workers is the amount of control you have over them. With a W-2 employee, you have...

08 December, 2021

Housing Allowance Resolution Sample  The following is a sample resolution to be adopted by the board of directors of any organization which employs a “minister” as defined by the IRS: Whereas, section 107 of the Internal Revenue Code specifies that the amount of ministers’ compensation that is...

01 December, 2021

While it is true that ministers, and other church employees, may earn less than those performing similar jobs requiring similar skills in the secular world, there are unique tax advantages that can help offset the compensation differences. One of the greatest advantages for church workers...

24 November, 2021

When you manage a nonprofit, spending money is always an issue. After all, your company is funded by grants and donations, many of which have strings attached. It's your obligation to keep the organization lean and the overhead low. However, the bigger an organization gets,...

17 November, 2021

While ministers are employees for federal income tax reporting purposes, they are self-employed for Social Security purposes with respect to services they perform in the exercise of their ministry. This means that they must pay both the employee and the employer share of social security tax...

10 November, 2021