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 the IRS by clergy whose income isn’t subject to income tax withholding, including self-employment income, interest, dividends, alimony or rental income.
For those just starting as Clergy, you may not be familiar with how clergy taxes are paid.
The United States has a pay-as-you-go tax system. This means that the Internal Revenue Service expects you to pay your taxes throughout the year, rather than just making a lump sum payment in December.
For the majority of taxpayers who work as wage earners, this happens automatically. Most people have income tax, Social Security tax, and Medicare tax automatically removed from their paychecks. The employer is responsible for handing these over to the federal government, and the employee gets credit for it on their return.
Clergy are unique because they have a “dual tax status” that falls somewhere between wage earners and self-employed individuals. They can opt to have income tax withheld by their employer, but they are 100% responsible for making estimated payments for the Social Security and Medicare taxes on their own. This is where most first-year clergy get tripped up, because they forget to make these quarterly payments and end up owing a large tax bill at the end of the year!
Due Dates for 2021 Estimated Tax Payments
|Payment||When Income Earned in 2021||Due Date|
|1st Payment||January 1 to March 31||April 15, 2021|
|2nd Payment||April 1 to May 31||June 15, 2021|
|3rd Payment||June 1 to August 31||September 15, 2021|
|4th Payment||September 1 to December 31||January 18, 2022|
Clergy Financial Resources offers several options to help you with your tax questions or filing. We have listed two great support options to get started.
Pro Advisor I Tax Support
This support service provides you comprehensive answers to your notice questions. This support service is available at a flat rate of $75.00 for each 30-minutes session.
Clergy Support I Estimated Payment
Clergy Support has become the most valuable tax resource for today’s first call clergy, new clergy, and clergy that desire a tax resource throughout the year. This unparalleled support plan offers clergy a valuable resource for questions relating to clergy compensation, reimbursement plans, tax planning, estimated payments and other tax-related issues.
Clergy Financial Resources serves as a resource for clients to help analyze the complexity of clergy tax law, church payroll & HR issues. Our professionals are committed to helping clients stay informed about tax news, developments and trends in various specialty areas.
This article is intended to provide readers with guidance in tax matters. The article does not constitute, and should not be treated as professional advice regarding the use of any particular tax technique. Every effort has been made to assure the accuracy of the information. Clergy Financial Resources and the author do not assume responsibility for any individual’s reliance upon the information provided in the article. Readers should independently verify all information before applying it to a particular fact situation, and should independently determine the impact of any particular tax planning technique. If you are seeking legal advice, you are encouraged to consult an attorney.
For more information or if you need additional assistance, please use the contact information below.
Clergy Financial Resources
11214 86th Avenue N.
Maple Grove, MN 55369
Tel: (888) 421-0101
Fax: (888) 876-5101