Monthly Archives: September 2012

Tutorial on How to File Income Tax for Ministers

Minister taxes are filed slightly differently than your average Joe due the way that they are paid for the services. Oftentimes ministers have dual tax status because they are considered to be employees and self-employed simultaneously. The IRS will not consider a person as a minister for tax purposes unless they can meet a certain number of requirements.

1. To find out what requirements need to be met to be considered a minister contact the IRS. Usually if a person can answer any of these questions in the affirmative then they are considered a minister.

Are you a licensed, ordained… Continue reading

Basics of Clergy Finances and Taxes

For many pastors, ministers, or clergymen the reason that they get involved in church ministry is because of a higher calling, a passion for their religious beliefs and the people around them. They usually are not in it for the money, concerns about salary or clergy finances are often an afterthought. However, everyone has financial needs and there are some basic questions that need to be answered when it comes to clergy finances and clergy taxes.

Self Employed vs. Employee

As with other employees, religious organization report clergy income on a form W-2. The difference comes in the collection of… Continue reading

How to Properly Prepare Form 4361

Ministers can request exemption from paying self-employment taxes which includes exemption from Social Security taxes. Exemption must be applied for using IRS Form 4361 which can be a bit tricky. Here are the steps to take in order to accurately and easily fill out and submit the form.

1. Download Form 4361 from the IRS website and enter the basic info requested in section 1 including your social security number.

2. Fill out the religious position description that best describes you in Section 2.

3. Enter the date you were ordained and/or licensed in Section 3. A supporting document must… Continue reading

Clergy Tax: Deductions for Pastors

In many cases clergymen are considered both an employee of the congregation as long as they are paid by a salary from the church. They may also be considered self-employed if additional tasks are performed that are outside the regular duties outlined by the salary agreement.

When it comes to clergy tax, if a pastor chooses to itemize deductions, there are certain deductions that they are entitled to including:

Work Expenses

A number of expenses can be incurred when performing the duties of a pastor. To properly itemize these deductions an IRS form 1040, Schedule A needs to be submitted.… Continue reading

Clergy Taxes and Why They’re Different

Tax preparation for clergy members is a little different than it is for other workers. While employees in government or private jobs have Medicare, Social Security and income tax withheld, it is forbidden by law to withhold Social Security and Medicare taxes from a clergy member’s wages.

There are several requirements that must be met for the special clergy rules to apply. The minister must be licensed or ordained and have some managerial duties with a church or other house of worship. He or she must lead worship programs and have a leadership role. The minister also has to perform… Continue reading