Social Security tax allowance

If the church has agreed to pay half of the Social Security Tax and that amount is added to wages in box 1, doesn't that mean that the pastor will be paying social security on the amount given to him for social security?

Comments for Social Security tax allowance

Click here to add your own comments

SECA Allowance taxable income
by: Vickey

Yes, any amount paid to a minister to help with his social security taxes is considered taxable income.
SE paid by employer
by: larry rheaume

Is the amount paid the minister to help with his SE tax, taxed as income?
taxes paid for pastor
by: Sandi

Yes, the money would be included in box 1 if given to the Pastor directly... here is a good article:
http://ssfoundation.net/pastors/?qa_faqs=churches-are-helping-pastors-pay-their-se-tax

"Churches are helping Pastors pay their SE Tax
Pastors pay their Social Security and Medicare tax the same way a self-employed person would, through self-employment tax. This tax is 15.3% of income including the housing/parsonage allowance and is calculated on the Schedule SE that is filed with a minister’s tax return each year. They must pay Self-employment tax on their ministry income, including their housing allowance. When a pastor lives in a parsonage he also pays SE tax on the Fair Market Rental Value of the parsonage plus church paid utilities.Regular employees have an advantage when paying their Social Security and Medicare tax. Employers withhold half (7.65%) of every employee’s Social Security and Medicare tax from their wages. The employer pays the other half and the employee does not pay any taxes on the employer’s “matching” part.Pastors pay the entire 15.3% without the benefit of a non-taxable “matching” employer part.Many churches have realized the tremendous burden this places on a pastor and his finances and are paying a 9.8% (7.65% = half of SE tax + additional amount to help offset the additional taxes incurred when the salary is increased) “matching” portion as additional salary."

Prayers

Click here to add your own comments

Join in and write your own page! It's easy to do. How? Simply click here to return to Minister's W-2.