Quarterly Payments Tips
Quarterly Payments Tips In a non-clergy job, the employer withholds an employee’s federal income tax and Social Security tax from every paycheck. But clergy are classified as dual status employees and are exempt from both federal income tax withholding and considered self-employed for Social Security tax purposes. This means a church normally won’t withhold income tax and…
Quarterly Estimated Tax Payments – Q4 Reminder
Quarterly Estimated Tax Payments – Reminder If you are making quarterly estimated tax payments to the IRS, the due date for the September 1st – December 31st, 2021 quarter of the year is January 18th, 2022. You may be able to skip the January 18th payment if you file your 2021 return by January 31st,…
W-4 Withholding Calculator for Clergy
W-4 Withholding Calculator for Clergy According to IRS rules, income tax withholding for ministers is voluntary. If you do not complete a W-4 form, or if you indicate “exempt”, no federal tax will be withheld, and you should make quarterly estimated tax payments. Alternatively, you can complete Form W-4 so that your church withholds a…
What clergy need to know about estimated payments
What clergy need to know about making 2021 estimated tax payments The United States income tax system is a pay-as-you-go tax system, which means that you must pay income tax as you earn or receive your income during the year. You can do this either through withholding or by making estimated tax payments. If you didn’t…
Three key tax provisions that apply to clergy
The three main key tax provisions that apply to clergy: 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…
Tax Payment Deadline & Voluntary Withholding
Quarterly Tax Payment Deadline & Voluntary Withholding Now that the May 17 deadline for filing federal tax returns has passed, the next deadline that is relevant to many ministers is the quarterly estimated tax payment due on June 15, 2021. Ministers are Exempt from Withholding Requirement: Ministers are exempt from having employing churches withhold…
Reminder – Estimated payment Due on April 15th
Notice 2021-21, issued on March 29, 2021, does not alter April 15, 2021, deadline for estimated tax payments; these payments are still due on April 15. Taxes must be paid as taxpayers earn or receive income during the year, either through withholding or estimated tax payments. In general, estimated tax payments are made quarterly to…
FAQ for Clergy: What is the estimated tax penalty?
A couple questions that CFR gets every tax season are “Why am I getting assessed an estimated tax penalty?” and “What is an estimated tax penalty?” The US has a “pay as you go” tax system. Instead of paying your taxes in a lump sum, the IRS expects payments throughout the year. Most W-2 wage…
Estimated Payments Clarified!
When IRS first extended the filing deadline, they also extended the first estimated payment of the year. Initially they did not extend the second estimated payment, but they have since changed this, leaving a lot of taxpayers in a lot of confusion. Here are some of the most common questions about 2020 estimated payments clarified:…
What is an “Estimated Tax Penalty”?
An estimated tax penalty is a fee that IRS can charge you if you don’t pay your taxes in smaller increments throughout the year. Most W-2 wage earners don’t realize it, but their withheld tax is being sent to the government by their employer on a quarterly, monthly or semi-weekly basis. For self-employed individuals (like…
