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title1. Educate yourself on the tax implications


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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). 


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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.


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Understand your IRS employment status related to your commissioned/ordained status.

The IRS classifies commissioned/ordained ministers into two categories:

  1. 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.
  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.


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Decide if you want to stay in the Social Security System.

Stay in the Social Security System
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titleStay in the Social Security System
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Note

Remember, you must begin to pay your own Social Security/Medicare taxes-both the employee and the employer portion- (now called SECA since you are considered self-employed) from the point in time that Reliant received your certificate and begins recognizing you as a minister. We recommend reviewing 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

Please review Paying SECA Taxes (excerpt in drop-down below)

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If you inform us that you are ordained/commissioned and you do not have an approved exemption from the IRS then you are required to pay the 15.3% SECA (previously called FICA prior to being a minister) including both the 7.65% employee and 7.65% employer portions of social security and medicare taxes. As a minister, you are eligible to receive a FICA bonus that the employee can use to pay your SECA tax obligation for the social security and medicare tax that was previously paid by Reliant (the 7.65% employER portion). This Fica bonus increases your monthly salary and is included in your monthly paycheck to be used towards paying the employer portion of SECA taxes on your own. Even though you are choosing to stay in the Social Security system, the employEE portion is not deducted from your paycheck anymore once you become a minister, but but per the IRS, you are still responsible for paying both the employEE portion (7.65%) as well as the employER portion (7.65%). Remember, you must begin to pay your total Social Security/Medicare taxes- both the employee and employer portion- (now called SECA since you are considered self-employed) from the point in time that Reliant receives your certificate and begins recognizing you as a minister. 

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titlePaying Seca Taxes

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Paying SECA Taxes
Paying SECA Taxes


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titleOpt Out of the Social Security System

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. 



Warning
Reliant is not able to provide counsel in this tax decision and cannot assist in filing forms with the IRS. It is a personal decision that each minister must decide based on their own convictions.  


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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. 



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