Do Pastors Pay Self Employment Tax On Housing Allowance

I receive mainly housing allowance from my employer. Pay quarterly estimated seca taxes like any other self employed person would do.

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do pastors pay self employment tax on housing allowance

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See more below ministers can receive a housing allowance andor live in a church provided parsonage.

Do pastors pay self employment tax on housing allowance. Please choose that you pay se tax on your wages and housing allowance unless form 4361 has been filed with the irs and the exemption has been granted or you took a vow of poverty. Ministers pay their own self employment taxeven though ministers can be considered church employees they are treated as self employed for social security and medicare tax purposes. For social security and medicare tax purposes a duly ordained licensed or commissioned minister performing ministerial services is considered to be self employed.

They withheld money throughout the year from my housing allowance for self employment taxes i just dont know which of the options to select. Voluntarily pay seca through the church by asking the church to. If your congregation furnishes housing in kind as pay for your services as a minister instead of a housing allowance you may exclude the fair market rental value of the housing from income but you must include the fair market rental value of the housing in net earnings from self employment for self employment tax purposes.

Housing allowance and self employment tax. Im having trouble knowing which option to select for self employment tax for clergy. Chattanooga tn if the pastor only receives housing allowance and no salary does he have to pay self employment tax on the housing allowance.

What is the benefit of paying housing allowance rather than salary if the self employment tax applies to both. Many churches are unaware that section 3121b8a prohibits the church from withholding social security and medicare tax on the wages earned by a minister. Generally speaking a ministers income from his ministry related services is considered income from self employment and is thus subject to the self employment tax rules.

If you are conscientiously opposed to public insurance because of individual religious considerations or you are opposed because of the principles of the religious denomination you belong to you can claim an exemption from the self employment tax by filing form 4361 with the irs. It is the responsibility of the minister to pay the self employment tax on hisher salary and housing allowance unless heshe has applied for self employment tax exemption. Exemption for the self employment tax for certain ministers.

However as explained below while ministers may avoid paying tax on their housing allowance they must pay self employment tax on it. This means that your salary on form w 2 wage and tax statement pdf the net profit on schedule c and your housing allowance less pertinent deductible expenses are subject to self employment tax on schedule se form 1040 or 1040 sr self employment tax pdf. There are essentially two ways for pastors to pay seca.

Pay self employment tax on wages only 2. Pastors pay the seca self employment tax on their salary housing allowance and if applicable the rental value of church provided housing.

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