| Procedure Name: | Working with Reliant as a Commissioned or Ordained Minister |
|---|---|
| Scope: | All Staff |
| Revision Date: | January 26, 2024 |
| Last Review Date: | January 26, 2024 |
Please review the process of claiming your status as a commissioned or ordained minister in relation to your work with Reliant.
You are not required to claim your work as a commissioned/ordained minister to your work with Reliant. When you submit your certificate, your tax status is immediately changed and cannot be reverted unless your job role changes where you are no longer performing ministerial services.
Read the ECFA Minister's Tax and Financial Guide.
https://www.fcmmbenefits.org/ministers-tax-financial-guide-2024-2023-tax-returns
- Ministers are granted the ability to seek an exemption from Social Security if they meet IRS requirements.
- An exemption results in ceasing contributions to and eligibility for both Social Security (government retirement protection as well as other assistance programs) and Medicare (government medical insurance for people with disabilities and people over 65).
- By default, ministers remain in the Social Security system and are required to continue making payments directly to the IRS for their Social Security/Medicare coverage (see details below).
Consult a tax professional.
Reliant is unable to offer tax advice for your specific situation, so we strongly encourage you to talk with a professional who is up-to-date on current practices and understands ministerial tax implications. You are eligible for taxable reimbursement of some tax preparation and advisory fees.
Tax options governed by the IRS and Social Security related to Parsonage (Minister's Housing Allowance) and Social Security Exemption are available to licensed/ordained/commissioned ministers. Know your reporting responsibility and the consequences of choosing these options.
Understand your IRS employment status related to your commissioned/ordained status.
The IRS classifies commissioned/ordained ministers into two categories:
- Related to Federal Income Tax, you are employed by Reliant. Reliant withholds and pays Federal Income Tax on your behalf and sends you a W-2.
- Related to Social Security and Medicare, you are self-employed. Reliant stops withholding FICA taxes and paying the employer portion on your behalf. FICA tax includes portions for Social Security and Medicare, and the tax rate is 15.3%, which you are still obligated to pay unless you receive an exemption from the government. If you participate in the Social Security system, you file SECA forms with your tax return.
Decide if you want to stay in the Social Security System.
If you decide to stay in the Social Security system, you are eligible to receive a 7.65% FICA bonus to offset your tax obligation for Social Security that was previously paid by Reliant. This bonus increases your monthly salary and is included in your monthly paycheck.
Remember, you must begin to pay your own Social Security/Medicare tax (now called SECA since you are considered self-employed) from the point in time that you are paid Reliant wages as a minister.
See Paying SECA Taxes for more information. Review Chapter 7 in Zondervan Minister's Tax and Financial Guide and research options for paying SECA to the IRS.
https://www.fcmmbenefits.org/ministers-tax-and-financial-guide-2023-2022-returns
File Form 4361 with the IRS. Reliant may request an electronic copy of the Minister's IRS-approved Form 4361 for our records as a safeguard for the employee and Reliant as an employer if ever needed by the IRS regarding the minister's tax status.
A minister is fully responsible for paying social security/medicare taxes (SECA) until the IRS sends a certificate verifying that the exemption request has been granted. See Claiming Exemption from Social Security Taxes for more information.
Understand and plan your Parsonage Allowance
Parsonage allowance, also called housing allowance, is one of several special tax benefits applied to qualified ministers. Read the following page to learn about parsonage and begin thinking about the amount you may wish to designate to parsonage: Parsonage.
By submitting your certificate to Reliant, you are choosing to apply your new tax status to your work with Reliant. Once you submit your certificate, we must immediately change your tax status to no longer withhold FICA taxes. Once this change is made, we can not revert the tax settings unless the Minister has a job role change in which they are no longer performing ministerial services.
Helpful Solomon page regarding certificate requirements - Commissioned, Licensed and/or Ordained Minister Certificate Requirements
If you would like to claim your work with Reliant as that of a Commissioned/Ordained Minister, proceed to the next section. Otherwise, no further action is necessary.
Email a copy of your certificate and let us know your tax decisions to payroll@reliant.org. A Reliant director will review the certificate. Once approved, you will be notified, and your tax settings will be changed.
If you inform us that you are staying in the Social Security system, you will receive a 7.65% FICA bonus to offset your tax obligation for Social Security that was previously paid by Reliant. This bonus increases your monthly salary and is included in your monthly paycheck.
Remember, you must begin to pay your own Social Security/Medicare tax (now called SECA since you are considered self-employed) from the point in time that you are paid Reliant wages as a minister.
See Paying SECA Taxes for more information. Review Chapter 7 in Zondervan Minister's Tax and Financial Guide and research options for paying SECA to the IRS.
https://www.fcmmbenefits.org/ministers-tax-financial-guide-2024-2023-tax-returnsIf you have an exemption from Social Security, email payroll@reliant.org stating, “I am exempt from the Social Security System because I am conscientiously opposed to receiving public insurance as a minister.”
This is the official statement employers are required to collect as an assurance that the minister is properly informing their employer, Reliant, of their tax decisions as a minister.
In some cases, Reliant may also request an electronic copy of the Minister's IRS-approved Form 4361 for our records. The collection of this form is a safeguard for the employee and Reliant as an employer, to ensure Reliant has an electronic copy saved to our records if ever needed as a part of interactions with the IRS regarding their minister's tax status.
Once you receive our email that your Certificate and tax decision has been processed, please submit a new Support Goal in TOOLBOX https://toolbox.reliant.org/account/sign-in?return=%2Fsupport-goals.
You will see your minister status reflected on your support goal. Make sure to select "no" to having opted out of Social Security.
You will see your minister status reflected on your support goal. Make sure to select "yes" to having opted out of Social Security.
Complete a Parsonage Request form if you wish to receive Minister's Housing Allowance (Parsonage).
Once your parsonage amount is approved, it becomes effective on the next applicable pay period. To change your parsonage amount in the future, complete a new Parsonage Request form and share it with payroll@reliant.org for approval. Dave Meldrum-Green, our director of Organizational Affairs & treasurer, reviews and approves all parsonage requests.
Reference Chapter 4 in Zondervan Minister's Tax and Financial Guide for details on Ministerial Housing Allowance.
https://www.fcmmbenefits.org/ministers-tax-financial-guide-2024-2023-tax-returnsContact your Program Team Liaison to submit a new job description reflecting your responsibilities as a commissioned or ordained minister.
Additional Resources
- Claiming Exemption from Social Security Taxes
- Paying SECA Taxes
- Parsonage
- ECFA Ministers' Tax and Financial Guide
- Ministers' Tax Guide by Guidestone
- Worth's Income Tax Guide for Ministers. You can contact them at 574-269-2121. They are located in Warsaw, Indiana.
- IRS Publication 517, “Social Security and Other Information for Members of the Clergy and Religious Workers”
- Commissioned, Licensed and/or Ordained Minister Certificate Requirements
Questions regarding commissioning, ordination, parsonage, FICA Bonuses? | |
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| Department | Employment Services |
27 Comments
Sarah Swann
user-231f6 this is also a PDF on Solomon so I'm assuming this page needs to move into the field manual as well. Just leaving comments on pages to move to remind us.
user-1a794
Sarah Swann, just conferring with Mike. This page does need to go into the field manual. It is written to the missionary.
Sarah Swann
user-1a794, Mike Swann I wasn't sure where to put this page in the field manual. Let me know where you want it to go. I put it here b/c this seemed like a possible place. I updated the GCM wording to Reliant and all the email addresses.
Mike Swann
Sarah Swann, that looks great!
Tonya Bartels
Unknown User (ed.courtney@reliant.org) I have a question regarding the FICA Bonus. This is actually calculated at 8.25% of their monthly salary to also cover tax on the bonus. It that something you think I should add or will that lend to confusion? I could just add a sentence at the end of that section so they are informed of the actual calculation so that they do not question it later. What do you think?
Unknown User (ed.courtney@reliant.org)
Great. I added that in. I think it makes sense there.
Tonya Bartels
Cori changed some of the wording and she thinks it will add confusion, so I am going to take it back out. Sorry that I am causing you extra work today.
Mike Swann
Unknown User (ed.courtney@reliant.org), this page says ready and not vs. published. Looks like there were some changes to it that need updating.
Unknown User (ed.courtney@reliant.org)
user-1a794 It looks like you made some changes to this page. Is it ready to be published?
Keva Ambre
Not sure if this will help, but here's an email I sent explaining this to a missionary who didn't understand why his support goal had the FICA Bonus:
You might remember submitting your ordination paperwork to Reliant so that you could receive parsonage. There were a few shifts that happened as a result of parsonage eligibility:
To make up for this expense, Reliant offers a "FICA Bonus" allowing more in your take-home pay ($256 a month) so you can turn around and pay your Social Security and Medicare taxes (SECA). An easy way to remember it is, “FICA pays for SECA.” *Please talk to your accountant about how to set up these payments since Reliant no longer makes them for you.
If you want to stay in the Social Security system, you must continue paying this SICA tax. Your portion is $256 a month. That’s why your support goal is $256 higher than before. I believe Reliant thought you were already covering your Social Security and Medicare taxes. So, when they discovered you weren’t, they added that FICA Bonus onto your support goal so that you would have the funds to pay that tax so you could stay in the Social Security system. So, that’s why you now have the goal of $5,212.
If you want to drop your goal back down to $4,956, we certainly can remove the FICA bonus. But, that would mean you’d be paying those Social Security and Medicare taxes out of your regular take-home pay (to the tune of $256 a month).
Tonya Bartels
We do send everyone the tax guide and Barb, Erin or I have an extensive conversations explaining it. Thank you for carrying the torch on this one!
Dave Meldrum-Green
Great work, Tonya Bartels user-2ce9f Barb Secklerfor your extensive conversations explaining the ministerial info we send out to our newly ordained/commissioned ministers. It is much appreciated!
Tonya Bartels
Mike Swann Barb Seckler I was thinking about this last night and some this morning. I don't have time to flesh this out at the moment,but we keep running into the issue of the missionaries going through the steps that are based off of decisions they need to make for their taxes, and then after the parsonage and FICA Bonus is set up and they either have their book and they now looking at it after the fact, or sometimes they have pulled all the triggers for parsonage and FICA Bonus before they even get the book. I feel like we need to get the book to them possibly even before they send in the Cert. I am wondering if we can change the wording in the first info box to say something like "if you are unsure or unaware of your tax decisions, please email benefits@reliant.org a request the tax guide before you send us your certificate and change your tax relationship with us and the IRS" I am sure there is a better way to say that, but you get the gist. Or, we need to move #7 up in the list, because that decision effects the FICA Bonus and I think the order may be messing with they way the missionaries are submitting their information and then they start thinking through the decisions. They need the opportunity to read and understand before they start making "choices" that they are obviously not understanding that is what they are doing. The other thought I had was defining the forms. For example: by submitting this form or this request you are telling us that you have made this decision regarding your taxes (or whatever the specific thing is). Again, not that we have time to dive into this too much, but I wanted to capture my thoughts and ask if y'all had any ideas how to make this more clear and helpful for our missionaries.
Barb Seckler
Tonya Bartels I like that idea. I'd be open to discussing that and making this page reflect that process as well as adding links to the new pages we created, once we've fine tuned them.
user-1a794
YESSSS YESSSS YESSS !! THIS is what I've been trying to say for ages !!!!!! Please yes. As soon as i can find them, i'll include emails that i've wirtten to try to address this.
Sending the notification of ordination should NOT be the FIRST thing !!! once we have ordination, we must stop FICA. but people havent yet learned how to manage that. !!! learning and choosing should be first . AT one point i re-wrote this page making Notification like the third or later step. #! must be LEARN about the impact.
thank you T O N Y A !!!!
ps. I was copying you on emails to / from malaysia this week were to give assurance that I'm educating folks, hoping to help with communciation tools.
Tonya Bartels
user-98d24 I removed the contact card on this page because we are moving this process to the payroll inbox and the contact card was for benefits. If possible, can we create an Employment contact card with the payroll inbox email listed on it, and have both Kaitlin and I listed? Then we can add that here.
user-98d24
Sure thing Tonya Bartels, I'll work on adding the contact card today.
Dave Meldrum-Green
Barb SecklerTonya Bartelsuser-98d24 Barb and Tonya, I have been meaning to read and review this Solomon page for a couple of months now. I finally got some time to look it over. I made comments to Amber about changes to improve the way we word things. Unfortunately, I realize now that I only tagged Amber on the comments. If either of you have any questions or would like to discuss any of the wording changes I am proposing, let me know. Thanks!
Barb Seckler
Dave Meldrum-Green
Hi Dave – Deborah Kennedy revamped this page to try to make it more streamlined and to remove excessive wording that got confusing for staff. Tonya Bartels and I looked over it. I am fine with most of the changes you suggested and tagged Deborah on them. She was trying to be less wordy so she may come back on some of the suggestions to try to not re-state words that can be implied within the same sentence.
I’m coping Deborah on this reply, I don’t think Tonya needs to re-review this page as I did a run-through and no significant content changes were suggested and I want to value her time. FYI user-98d24 .
Deborah Kennedy
Dave Meldrum-Green Thank you for looking this over!! I made some changes, incorporating your wording while also trying to keep it succinct. Thanks!
Barb Seckler
Dave Meldrum-Green I want you to know we also recorded a series of videos on this topic that does go into more details that will be assigned to ministers on Learn very soon.
Dave Meldrum-Green
Barb Seckler
Deborah Kennedy- CJ Whitehad some good feedbcak for us about adding a step 5 on Step 1 educate to be thinking about parsonage and their numbers earlier in the process so that when they send in the certificate so they can get that parsonage benefit sooner by being prepared for all the items in step 2. Would you want to review this page for that tweak or would you want ES to do that?
Julie Thomas
Tonya Bartels - does the first drop down also need to be edited with the URL rather than instructing them to request the book?
Tonya Bartels
Not going to lie Julie Thomas, I thought I already did this. But now I actually did, and I added multiple places, wherever we referenced a chapter since it's a link. It is ready for your review and approval.
Jenni Saniuk
Tonya Bartels given our conversation today about staying in social security, does anything on this page need to change?
Tonya Bartels
Jenni Saniuk I have already updated this page to reflect the changes in the process.