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Income Tax Withholding for Ministers

Posted by dantleung , 11 January 2016 · 1822 views

I am the new treasurer for one of the C&MA churches in Michigan. I would like to know whether our church, which is a typical C&MA church, is required to withhold income taxes for an ordained minister on our payroll. According to the following article on the internet, it seems that we are not supposed to withhold Social Security and Medicare taxes for the minister. Also, according to the article, our church is not required to withhold income taxes for the minister. The church, however, can withhold income taxes for the minister if the minister voluntarily asks us to do.

 

http://www.clergysup...ing-for-clergy/

 

Can anyone share his or her experience with what you do at your church with regard to income tax withholding?

 

Thanks and have a blessed day!

 

Dan Leung






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Trish Santos
Mar 22 2016 01:25 PM

Dan,

I'm sure you received your answer by now... The article is correct.  Clergy are considered self-employed for income tax purposes.  Churches should not withhold FICA tax from ministers' compensation.

 

Trish Santos
The Alliance Southeast

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Theodore Rice
Sep 11 2018 07:24 AM

While this is an old post, I would qualify that by saying that the pastor may choose to have FICA withheld, in which case you have to do so. You have to do so for other staff in any case.

 

Also, If you are a treasurer, be very careful in dealing with these things. In our church, different treasurers neglected to either file the proper paperwork or to do it on time, resulting in fines and other problems when the IRS caught up with it. No one on the Board realized it. Most of us can't even understand the monthly reports.

 

Now we are looking into paying a payroll service to handle dealing with the pastor and staff payroll, and filing the right IRS paperwork on time.

 

My personal observation is that this stuff is getting so complex and time consuming that most small churches are having a hard time finding volunteers knowledgeable enough and diligent enough to serve as Treasurer. It is getting so that they will need to at the least, pay a Treasurer. Probably better is to hire the work out and just have a Treasurer to send them necessary information, generally oversee  things, and report to the Board.

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