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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 clergy pay SECA tax, most ministers are considered employees and should receive a Federal Form W-2 from their employer.

Estimated taxes

Clergy must pay quarterly estimated taxes or request that their employer voluntarily withhold income taxes. Clergy can request
that an additional amount of income tax is withheld to cover their self-employment tax. 

Housing allowance

Clergy can have a portion of his or her salary declared as a housing allowance, and thereby exempt the eligible amount from federal income tax. Note,  that under Section 107 of the Internal Revenue Code, some clergy pension distributions can also be declared
as a housing allowance.

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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: (763) 425-8778 
Fax: (888) 876-5101
Email: clientservices@clergyfinancial.com

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