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The following is included in this guide:
FAQ
ECFA - Ministers and Social Security Tax
ECFA - Ministers Opting Out of Social Security
Opting Out of Social Security Excerpt from the Minister's Tax and Financial Guide
Where do I begin?
The first thing you should do is read the Minister’s Tax and Financial Guide. This book contains a wealth of the information you will need to properly understand your options and responsibilities as a minister. Next, you’ll want to request a parsonage allowance from GCM.
Should I seek Professional Tax Advice?
GCM strongly encourages you to contact a professional tax advisor to guide you in your personal tax responsibilities now that you are commissioned or ordained. Unfortunately, for legal reasons, GCM is not able to offer tax advice for your specific tax situation.
How do I request a parsonage allowance from GCM?
Complete a GCM Parsonage Request Form and email it to hr@gcmweb.org. You may find this form on StaffNet under the “Payroll” tab, in the “Forms” section. Once your parsonage amount has been approved, it will become effective on the next applicable pay period.
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- Please read Chapter 5 in the Minister’s Tax and Financial Guide for information on parsonage allowance.
What happens with my social security tax?
Once GCM receives notice you’ve been ordained or commissioned, GCM will stop withholding social security (FICA) tax from your paychecks. However, you now have the personal responsibility to directly pay this tax to the government yourself.
- Please read Chapter 7 in the Minister’s Tax and Financial Guide to find out why this change must take place.
- Please read Chapter 8 to find out your options for paying this tax.
What about opting out of the social security system?
Please read Chapter 7 in the Minister’s Tax and Financial Guide to find out about the option of opting out of social security tax. Remember, you cannot make this decision to opt out simply because you think you can achieve a better investment return on those funds elsewhere (economic reasons). You may also want to talk with other ministers who have dealt with this option. To obtain a copy of the IRS Form 4361, you may visit the IRS web site at www.irs.gov. We’ve also included additional reading resources from the ECFA. Be certain that if you make this decision to opt out, it is for the right reasons.
If I decide to stay in the social security system, am I eligible for additional compensation from GCM to offset the social security taxes?
Once a minister communicates his decision to GCM to remain in the social security system (thereby giving up the option to opt out of the system) then GCM will give that employee an additional 7.65% in salary from that point forward. This additional GCM compensation is called a “Social Security Offset”.
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- Ministers who communicate their decision to GCM to remain in the social security system within 3 months from receiving this Information Packet, will be eligible for the 7.65% social security bonus (FICA Bonus) retroactively to the time period they began receiving GCM wages as a minister.
- Ministers who communicate this decision to GCM anytime after 3 months (from date of receiving this Info Packet), will be eligible for the 7.65% (FICA) bonus beginning with the next available pay date. (You will only be eligible for up to 3 months of retroactive (FICA) bonus and must request that in your email).
- Remember, you must begin to pay your own social security tax (SECA) from the point in time that you are paid GCM wages as a minister. See Chapter 8 in Zondervan Minister Tax & Financial Guide for options on paying this SECA tax.
If I decide to opt out of the social security system, what do I do?
Please read the section titled “Opting Out of Social Security” in Chapter 7 in Minister’s Tax & Financial Guide very carefully. Follow the instructions given in the Guide. You may also want to contact a tax or accounting professional for additional advice. GCM is not able to assist you with this decision. It is a completely personal decision. Remember this is a permanent decision.
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Please be aware that if you request a “Social Security Offset” and then decide within the two years that you are opting out, you will also be required to repay the “SS Offset”.
Summary of steps:
1. Read the Zondervan Minister’s Tax & Financial Guide.
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4. Research additional resources below or seek professional tax and financial advice if necessary.
Attached Resources:
- “Ministers and Social Security Tax” provided by: Evangelical Council for Financial Accountability. www.ECFA.org.
- “Ministers Opting Out of Social Security” provided by: Evangelical Council for Financial Accountability. www.ECFA.org.
- Excerpt from “Chapter 6 à Retirement and Social Security; Opting Out of Social Security” from 2012 Minister’s Tax & Financial Guide.
- FAQ
Reference to Additional Resources:
a. Church and Clergy Tax Guide by Richard R. Hammer.
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