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title1. Educate yourself on the tax implications


UI Steps


UI Step

Read Zondervan Minister's Tax and Financial Guide.

https://www.fcmmbenefits.org/sites/default/files/2023-Ministers-TaxFinancialGuide.pdf

Review Chapter 6 in Zondervan Minister's Tax and Financial Guide. 

  • 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). 


UI Step

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.


UI Step

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.


UI Step

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

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titleStay 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.

Note

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/sites/default/files/2023-Ministers-TaxFinancialGuide.pdf



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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.  


UI Step

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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title2. Notify Reliant of Your Commissioning/Ordination and Your Tax Decisions

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.

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.

UI Steps


UI Step

Email a copy of your certificate to Reliant: payroll@reliant.org. The certificate will be reviewed by a Reliant director. Once approved, you will be notified and your tax settings will be changed.


UI Step

Email Employment Services at payroll@reliant.org about your tax decisions.

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titleStay 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.

  1. Email payroll@reliant.org to request the FICA bonus. 
    • Once Reliant receives your email requesting the bonus, you will receive a new salary offer, and your bonus will begin on the next applicable pay date. You are eligible for up to 3 months of retroactive FICA bonus after communicating to Reliant your decision to remain in the social security system but must request that in your email.
  2. Submit a new Support Goalafter you receive confirmation that your bonus request has been processed. Submitting a new Support Goal accepts and activates the bonus. 
Note

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/sites/default/files/2023-Ministers-TaxFinancialGuide.pdf



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titleOpt Out of the Social Security System

If 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.



UI Step

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/sites/default/files/2023-Ministers-TaxFinancialGuide.pdf


UI Step

Contact your Program Team Liaison to submit a new job description reflecting your responsibilities as a commissioned or ordained minister. 



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