15 Sep I’m a Clergy Staff Member. Is My Social Security Allowance Taxable?
I’m a Clergy Staff Member. Is My Social Security Allowance Taxable?
The short answer to this question is yes.
Unlike non-clergy employees, clergy do not have Social Security or Medicare taxes taken out of their paycheck. The Church also does not pay any matching portion to IRS, so the Minister has to pay both halves, the employee and employer portions. These are usually paid in quarterly estimates, using coupons or vouchers.
In some cases, the Church may decide to pay half of the Social Security and Medicare taxes on behalf of the Minister, even though they are not required to. This payment of taxes on behalf of the Minister is called a “Social Security Allowance”.
Unlike other types of allowances, this payment of taxes for the Minister is considered taxable income. If the Church pays $1,000 of tax, you have to report an additional $1,000 of income on your tax return. The end result is that you will owe slightly more tax as a result of taking the allowance.
This information is provided with the understanding that Payroll Partners is not rendering legal, human resources, or other professional advice or service. Professional advice on specific issues should be sought from a lawyer, HR consultant or other professional.