Your Form W-4 determines how much federal income tax is withheld from your paycheck. Keeping this form up to date ensures that your tax withholding matches your current situation—helping you avoid surprises at tax time.

Several major life events can significantly impact your tax liability. If any of the following apply to you, it’s a good idea to review and update your W-4:

Birth or Adoption of a Child

  • Adding a dependent may reduce your taxable income.
  • You may qualify for credits such as the Child Tax Credit.
  • Updating your W-4 ensures your withholding reflects these changes, potentially increasing your take-home pay.

Pay Raise or Change in Income

  • A higher salary can push you into a new tax bracket.
  • Without adjusting your W-4, you may under-withhold and owe taxes at year-end.
  • Updating your form helps balance your withholding with your new income level.

Divorce or Change in Marital Status

  • Your filing status directly affects your tax rate and standard deduction.
  • After a divorce, you may no longer claim certain exemptions or credits.
  • Updating your W-4 ensures your withholding reflects your new filing status.

Significant Medical Expenses

  • Large medical bills may qualify as itemized deductions.
  • Adjusting your W-4 can help account for reduced taxable income.
  • This prevents over-withholding and allows you to keep more money in your paycheck throughout the year.

Clergy and W-4 Withholding Rules

  1. Dual Tax Status
  • Income Tax: Clergy are treated as employees. They can elect to have federal income tax withheld by filing a W-4.
  • Social Security & Medicare: Clergy are considered self-employed under the Self-Employment Contributions Act (SECA). This means they pay the full 15.3% self-employment tax on salary and housing allowance, rather than having FICA withheld.
  1. Voluntary Withholding
  • Churches are not required to withhold federal income tax from clergy pay.
  • Ministers who prefer withholding (instead of making quarterly estimated tax payments) can submit a Form W-4 to request voluntary withholding.
  • This can help clergy avoid underpayment penalties and simplify tax planning.
  1. Estimated Tax Payments
  • If clergy do not elect withholding, they must make quarterly estimated tax payments to cover both income tax and self-employment tax.
  • Payments are due April 15, June 15, September 15, and January 15 of the following year.
  1. Special Considerations
  • Clergy housing allowance is subject to self-employment tax but exempt from federal income tax.
  • Written acknowledgments of gifts or reimbursements must be carefully documented to avoid tax issues.
  • Ministers may apply for an exemption from SECA taxes if they oppose participation on religious grounds, but this requires IRS approval (Form 4361).

If you need guidance that is tailored specifically to your unique situation, we encourage you to connect directly with Pro Advisor Support. Their experienced team specializes in assisting clergy and church organizations with complex tax, payroll, bookkeeping, and HR matters. Whether you have detailed questions about compliance, deductions, or planning strategies, they can provide expert advice and walk you through the next steps with clarity and confidence.

Clergy Financial Resources
Tax I Payroll I Bookkeeping I HR | Consulting
11214 86th Avenue N.
Maple Grove, MN 55369

Tel: (888) 421.0101

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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: (888) 421-0101
Fax: (888) 876-5101
Email: clientservices@clergyfinancial.com

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