IRS Tax Help for Pastors

One of our goals here at Money Wise Pastor is to offer easy-to-understand tax help for pastors, because clergy taxes can be extremely challenging due to special IRS tax issues that apply to American pastors.

The IRS Considers Pastors Both Employees and Self-Employed

Pastors, ministers, and other members of the clergy are in a unique position when it comes to paying taxes to the U.S. government, which considers them employees for the purposes of paying federal income tax but self-employed for purposes of the Social Security tax. Because of this, pastors pay self-employment tax instead of the social security tax that traditional employees and employers pay. For more info, please read Are Pastors Self-Employed or Church Employees?

Ministers are Exempt from Income Tax Withholding

Pastors are exempt from income tax withholding and are not obligated to have federal taxes withheld from their paychecks. Pastors may voluntarily choose to ask their church to withhold their taxes by completing a W-4 form requesting that a certain amount be withheld. Otherwise, pastors are required make quarterly payments like self-employed people do.

The Clergy Housing Allowance Exemption Reduces a Pastor’s Taxable Income

Pastors are able to reduce their taxable income by taking advantage of the clergy housing allowance exemption as declared by their church board.

The housing allowance exemption allows pastors to exclude from their taxable income the lesser of the…

  1. Housing allowance declared by the board.
  2. Fair rental value of their home.
  3. Actual housing expenses incurred by the pastor in that year.

Pastors Can Opt-Out of Social Security

Pastors in their first two years of ministry may opt-out of the social security program if they file IRS Form 4361 (and get it approved by the IRS) which states that they are conscientiously opposed to the social security program based on religious principle.

Once Form 4361 is approved, the pastor would not be eligible to receive any form of social security benefits (including disability and death benefits to surviving spouse), Medicare, FEMA disaster assistance, Pell Grants for education, food stamps, or other social welfare assistance.

Where Do Pastors Turn for Tax Help?

Tax Help for PastorsBecause of the special tax treatment for clergy, many American pastors seek the services of a professional tax preparer to take advantage of all the benefits that are allowed and to avoid paying any more tax than is necessary.

Others, like myself, rely on time-tested clergy tax guides like the Zondervan Minister’s Tax Guide or Worth’s Income Tax Guide for Ministers.

In future posts, I’ll explain each of these special clergy tax issues more in-depth here at Money Wise Pastor, and will do my best to offer pertinent tax help for other pastors.

In the mean time, if you’re a pastor, please tell me…what is your biggest clergy tax question?  Share your question in the comments and I’ll do my best to answer it in a future article.

You might also like:

 

About the author

Rich Rich writes on personal finance from a pastor's perspective here at Money Wise Pastor. He loves In-N-Out Burger (and has the t-shirts to prove it), urban living, homeschooling, Gungor concerts, helping people succeed in life and work, camping, dreaming with his wife, and equipping his five children to become financially faithful and free. Find him on Twitter and Facebook.

Comments

  1. Shiver me timbers, them’s some great information.

  2. By bolting a supercharger on, you can get up to a 150% increase in power and torque.
    Redeemable aat Best Buy store locatiion where deposit was placed.
    Scarecrow Crafts – Make a scarecrow or more to represent the not-to-smart scarecrow (Twist) in Wizard of Song.
    Remember to bring plenty oof trivia questions and answers and to decide upon a simple
    set of guidelines. She has always loved to write and has
    a wide range off interests. Angelina wows the cowd in a fittesd Atelier Versace gown with
    a touch of red and Lorraine Schwartz earrings. Receie 25% off used games,30% off used books, DVDs and CDs at by entering promo code PSYCHO at checkout.
    I wiill stay on top of this, and I will post new codes as soon as I confirm thwt they work.
    The two enjoy gallivanting on the streets Munich and taking
    in the European culture. The game is played on a rectangular field of grass
    or green artificial turf, witth a goal inn the mijddle of each of the short ends.

    Many offer seventy five and ninety member bingo along with team bingo and bingo tournaments.
    Alabama opened with an impressive rrun rule win over Arkansas byy
    the score of 8-0.Define your needs and the hardware
    and services you need to the point where you can justify every
    itrem and expense. To bypass this you would need a software
    program that allows you to burn wii games. If you can’t be with the
    one you want, gett slppy drunk with the one you’re with.
    The studio Crystal Dyanmics are taking big steps to
    changing the franchise. *He had two game-winning RBI and one
    game-tying RBI in the sweep. Whatt thhe terms should be and
    what to look for in a golf course , how to price out your contracts.
    In handicapping, dutching allow a beytor to wager on two or more runners, at different odds, in the same race.
    I hope these suggestions can get you on your way to having the best Halloween party ever.
    Meanwhile, Wisconsin had at least two, sometimes even a third and fourth player on their roster that could
    spark the offense any given night with a scring outburst.
    The fairway area oof a golf course is a vast area and
    it is no small task to keeep it in a playable condition which would usually be between 12mm and 18mm.
    Well, the whole situation doesn’t play out very well.

    If you live in the Denver Metro area, watch the Winter Olympics on Clicck
    here to visit 9News Olympic coverage. Ad-hoc mode will be supported
    on PS3 via “adhoc party for Play – Station Portable” and again, support of this feature will vary by title.

  3. This is one reason why, when the first signs of arthritis showed up,
    I did not pay much attention to it. Wilde’s Creepy House, a full-scale haunted
    house with live actors, is guaranteed to send chills
    up and down your spine when it debuts October 17 from 11 a.
    The 37-year-old British hunk posed with a number of young players at Workers Stadium on Thursday (March 21,
    2013). This smartphone will probably be the first droid
    of Samsung which features the unreleased version of the Google
    OS. Affliction is generally acknowledged as being the best leveling spec for the warlock class.
    And with a back porch so messy, one would begin to wonder what scribble is written inside his notebooks.
    Among he are those timesis monies folks, old blokes,who pushed women aroundfor centuries, like cattle,
    due to God’s half-written call. You can check out more of Lana
    Marie and her work on her Facebook, Twitter, and
    website. well, if not make it all better, at least make you
    feel like you’re not alone. For younger children whose reading level
    may not accommodate the text, you could print images of the characters and objects
    of their affection from the internet and paste them to the hearts.
    Obama continually stumps with the message, “It’s whether we’re going forward, or going backwards. If you come in all guns blazing, then this boat for you. Once he returns to his human skin the warg reveals the destruction and death that surrounds the black brother’s former encampment at the Fist of the First Men. Both of these can be done by clicking on your web browsers TOOLS tab and then clicking on INTERNET OPTIONS tab or the OPTIONS tab. However, most media outlets and bloggers commented on how creepy it was for a child to be presented as an adult in ad campaigns. As a pet owner who recently moved from New York City to the Los Angeles area, it has been quite a change for me and I think an even bigger (and better) change for my dog and cat. If you want a great medium length rod, the Castaway series of graphite rods have a variety of nice types so that you can select from. Daniel Floyd explains that the astronomical costs of video games can often deter publishers from accepting new ideas, and opt for the safer, profitable franchises. A great example can be a game that helps to enhance the mathematical ability of your child possesses different difficulty game levels. They can also build their own Halloween-themed LEGO Model at the activity station in the Wells Fargo Fun Town 4D Theatre Plaza. Try to crouch walk and move when he is already shooting. Olympic Flag consists of the five rings and white background, was designed by Pierre de Coubertin in 1912 and officially debuted in 1920 at the Games of the VII Olympiad in Antwerp, Belgium. Facebook’s users practically swear by it, and yes it has get being the foremost network to share and communicate. com has completely whitewashed their investigation and the situation is much more dire than itv. It will be televised on the MLB Network at 6:15pm eastern time Saturday evening.

Trackbacks

Speak Your Mind

*