Clergy Tag

The IRS has ruled that clergy are self-employed for purposes of paying social security taxes. This means that they must pay both the employee and the employer share of social security tax under the Self-Employed Contribution Act (SECA). Churches are prohibited from paying FICA tax for...

30 May, 2019

Incorrectly classifying someone as an independent contractor instead of an employee can be very costly for the church based on IRS penalties. When in doubt, your best bet is to classify someone as an employee. If you really want to classify an individual as an independent...

23 May, 2019

A minister who wishes to be exempt from social security/Medicare tax must file a Form 4361 with the IRS for approval. Before your application can be approved, the IRS must verify that you are aware of the grounds for exemption and that you want the...

16 May, 2019

Churches normally hire an interim minister for the time between the departure of a pastor and the calling of a new pastor or a “sabbatical interim pastor” when a pastor is granted sabbatical leave. Full-time, interim ministers are usually paid on the same scale as...

09 May, 2019

Employees often use their personal cell phones for church business. The church requires that they submit monthly expense reports and they’re reimbursed through an accountable plan. The church board wants to ditch the paperwork and just pay flat-dollar allowances to employees every month. Would that be...

02 May, 2019

The allowance must be officially designated in advance by the church. The designation should be stated in writing, preferably by resolution of the governing body and/or in an employment contract. In addition, the designation should be recorded in the church budget and payroll records. If the only reference...

25 April, 2019

When Steve Dawson first started working with churches more than two decades ago, much of the accounting work was still being done by hand. Churches were just starting to use computers for spreadsheets and bookkeeping software. Not everyone was convinced that was a good idea, said...

18 April, 2019

Ministers who pay off their mortgages may have a housing allowance for other eligible expenses of maintaining a home, such as utilities, taxes and repairs. With no mortgage payment, their expenses are likely to be much lower. Some ministers mistakenly think that they can exclude the...

04 April, 2019