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Overview
This page will help you understand some of the financial and employment issues related to becoming an Congratulations on being ordained or commissioned as a minister! Your character and maturity is a testimony of God’s sanctifying work in your life and your humility before Him. It’s a privilege to serve together with you. The information contained in this packet is intended to help you understand some of the financial and employment issues related to ministers. Reliant is also shipping you a complimentary copy of a great resource in the Zondervan Minister’s Tax and Financial Guide. Please use this book as your starting point in educating yourself on the issues of social security tax, parsonage allowance, social security exemption, .
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Steps to take
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1. Notify Missionary Resources you are ordained/commissioned; include copy of your certificate
Whom to email: HR@Reliant.org
2. Read Zondervan Minister's Tax and Financial Guide
Details: Once we receive your email, we will send you this book. Use it as a starting point for educating yourself on the issues of Social Security tax, parsonage allowance, Social Security exemption and other financial topics on being a minister.
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3. Consult a tax professional as needed
Details: We strongly encourage you to talk with a professional who is up-to-date on current practices in this field. Reliant is unable to offer tax advice for your specific situation.
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The following is included in this guide:
4. Complete a Parsonage Request form
Details: Once your parsonage amount has been approved, it will become effective on the next applicable pay period.
To change your parsonage amount in the future, simply complete a new Parsonage Request form and email it to hr@reliant.org for approval. Dave Meldrum-Green, our director of Organizational Affairs & treasurer, reviews and approves all parsonage requests.
Resources:
- Chapter 4 in Zondervan
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 Reliant.
What happens with my social security tax?
Once Reliant receives notice you’ve been ordained or commissioned, Reliant stops withholding social security (FICA) tax from your paychecks and we stop making Social Security payments to the government for you. Now you have the personal responsibility to directly pay this tax to the government yourself. The current rate of Social Security tax for Ministers is 13.5%.
- Please read Chapter 6 in the Minister’s Tax and Financial Guide to find out why this change must take place.
- Please read Chapter 7 to find out your options for paying this tax.
Should I seek Professional Tax Advice?
Reliant 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, Reliant is not able to offer tax advice for your specific tax situation.
Ministers are allowed to Opt Out of the social security system, but application must be made to the IRS.
A minister is fully responsible for social security taxes until he receives certification from the IRS that his/her opt-out request has been granted.
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Whom to email: HR@Reliant.org
5. Understand your new employment status
Details: You are now considered "self-employed" by Reliant for purposes of Social Security and Medicare. Reliant will stop withholding FICA taxes and paying the employer portion on your behalf. FICA tax includes portions for Social Security and Medicare, and the tax rate for 2015 earnings was 15.3%.
Resources: Chapter 6 in Zondervan Minister's Tax and Financial Guide
6. Make a well-informed decision about Social Security
Details: Ministers are granted the ability to opt out of Social Security if they meet certain requirements. By default you will remain in the system.
A decision to opt out must be based on conscience, not convenience. Remember,
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you cannot make the decision to opt out simply because you think you can achieve a better investment return on those funds elsewhere (economic reasons).
Reliant is not able to assist you with this decision. It is a completely personal decision. You may also want to talk with other ministers who have dealt with this option.
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A minister is fully responsible for social security taxes until he receives certification from the IRS that his/her opt-out request has been granted.
Resources: Chapter 6 in Zondervan Minister's Tax and Financial Guide
7. Notify Missionary Resources about your decision
Details: If you are opting out, your email must explicitly state, “I am opting out of the Social Security System because I am conscientiously opposed to public insurance as a minister.”
Whom to email: HR@Reliant.org
Additional steps if you stay in the Social Security system
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If you are opting out of Social Security, skip down to Additional steps if you opt out of the Social Security system |
1. Decide whether to take the FICA Bonus
Details: Reliant offers
If I decide to stay in the social security system, what do I do about the Employer Contribution for Social Security?
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an additional 7.65% in salary
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to offset the amount previously paid by the employer for Social Security
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. This bonus will be paid from the MTD account for which you are responsible and will be included in your monthly paycheck.
2. Notify Missionary Resources if you want the bonus
Details: Once Reliant receives notification that you would like the bonus, you will receive a new salary offer.
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Ministers who communicate their decision to Reliant
to remain in the social security
system within 3 months of communicating their ordination/commissioning to Reliant will be eligible for the 7.65% FICA Bonus retroactively to the time period they began receiving Reliant wages as a minister.
Ministers who communicate this decision to Reliant
anytime after 3 months 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.)
Whom to email: HR@Reliant.org
3. Submit a new Support Goal
Details: Make sure to wait to submit a new Support Goal until you have received confirmation that your bonus request has been processed.
Submitting a new Support Goal accepts and activates the bonus.
Resources: Support Goal on Staffnet
4. Look at your options for paying your tax to the IRS
Details: Remember, you must begin to pay your own
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Social Security tax (
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now called SECA since you are considered self-employed
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) from the point in time that you are paid Reliant wages as a minister.
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Resources: Chapter 7 in Zondervan Minister's Tax
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and Financial Guide
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opt out of the
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Social Security system
1. File Form 4361 with the IRS
Details:
Please read the section titled “Opting Out of Social Security” in Chapter 6 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. Reliant is not able to assist you with this decision. It is a completely personal decision. Remember this is a permanent decision.
You will, however, need to inform both Reliant and your local church in writing that you are conscientiously opposed to public insurance as a minister, based upon religious convictions.
Please be aware that if you request a FICA bonus and then decide within
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two years that you are opting out, you may be required to repay the bonus total you have received to date.
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Resources: IRS Form 4361 (Download)
2. Submit a new Support Goal
Resources: Support Goal on Staffnet
Review of steps to take
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- Notify HR@Reliant.org that you are ordained/commissioned. Include a copy of your ordination/commissioning certificate.
- Email HR@Reliant.org a new job description (Word version)
- Read Zondervan Minister's Tax and Financial Guide, which Reliant had mailed to you
- For further questions, consider talking with a professional who is up-to-date on current practices in this field. Reliant strongly encourages this.
- Complete a Parsonage Request form and submit to HR@Reliant.org (Word version)(PDF version)
- Understand your new "self-employed" status with Reliant
- Make a well-informed decision on whether to remain in the Social Security system or to opt out
- Notify HR@Reliant.org of your decision regarding Social Security
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If you are staying in the Social Security system:
- Decide whether to take the FICA Bonus
- Notify HR@Reliant.org if you would like to take the bonus
- Submit a new Support Goal to accept and activate the bonus (after you've received confirmation that your bonus request has been processed)
- Find out your options for paying your tax to the IRS
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If you are opting out of the Social Security system:
- File Form 4361 with the IRS
- Submit a new Support Goal
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Additional Resources
PDF includes:
How do I request a parsonage allowance from Reliant?
Complete a Reliant Parsonage Request Form and email it to hr@reliant.org. Once your parsonage amount has been approved, it will become effective on the next applicable pay period.
To change your parsonage amount in the future, simply complete a new Parsonage Request Form and email it to hr@reliant.org for approval. Dave Meldrum-Green, our Director of Organizational Affairs & Treasurer reviews and approves all parsonage requests.
- Please read Chapter 4 in the Minister’s Tax and Financial Guide for information on parsonage allowance.
Summary of steps:
1. Read the Zondervan Minister’s Tax & Financial Guide.
2. Complete the Reliant Parsonage Request Form. Send to hr@reliant.org.
3. Make an informed and well thought out decision about social security exemption. (Remember as a minister, you cannot opt out of social security simply for economic reasons).
- If you decide to stay in the social security system, email hr@reliant.org, notifying Reliant of your decision in order to be eligible for the 7.65% FICA bonus.
- If you decide to opt out of the social security system, send an email to hr@reliant.org stating that you are conscientiously opposed to public insurance as a minister.
- Complete a new Support Goal Worksheet
4. Research additional resources below or seek professional tax and financial advice if necessary.
Attached Resources:
Additional Resources and Information for Ministers
- “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.
- FAQ from Church Finance Today
- Excerpt from “Chapter 6 - Retirement and Social Security; Opting Out of Social Security” from
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- 2012 Zondervan Minister’s Tax & Financial Guide.
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- Ministers' Tax Guide by Guidestone
- Worth's Income Tax Guide for Ministers. You can contact them at 574-269-2121
Reference to Additional Resources:
a. Church and Clergy Tax Guide by Richard R. Hammer.
Can be ordered through NACBA at 800-898-8085 or http://www.nacba.net
b. Income Tax Law for Ministers and Religious Workers by Worth Tax and Financial Service.
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- . They are located in Warsaw, Indiana.
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- IRS Publication 517, “Social Security and Other Information for Members of the Clergy and Religious Workers”
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Have questions?Send an email to HR@Reliant.org or call Tonya Lundeen (407) 671-9700 ext. 106. |
