Browsing Category Taxes

As you probably know if you read this blog (or can find out here), pastors have to pay both the employee and employer portions of Social Security and Medicare taxes as if they were self-employed. Those Social Security and Medicare taxes are also called SECA taxes, which is a lot faster to type so that’s what I’m going to call them from here on out.  What Is A SECA Offset? Some churches feel kind of bad that their pastors have to pay ...

Tax season has just come to an end and most of us are either eagerly awaiting a return or bemoaning how much we had to pay. The rest of you filed an extension and are still trying to get your papers together or get your tax preparer to answer your calls. Isn't tax season fun? If you haven't opted out of Social Security, then you would have filed Schedule SE to calculate your Social Security and Medicare taxes, also called payroll ...

The clergy housing allowance is touted as the greatest tax benefit available to pastors. And it really is a great benefit. I learned back in 2019, though, that it can have a dark side. Not a Darth Vader using the Force to crush you kind of a dark side, more like a "If I hadn't claimed so much, I'd be $1,000 richer" kind of dark side. The problem is how it can affect the Additional Child Tax Credit, which is ...

The clergy housing allowance is by far the most common topic that I receive questions about. Here are 10 or the most common questions answered to help you get the most value out of your housing allowance: How does a housing allowance work? You, the pastor, calculate what your housing costs will be for the year and submit it to your church. Your church approves the housing allowance and does not include it as taxable income in box 1 of ...

Clergy taxes are incredibly unique in a complex tax system, so it can be hard to find a tax preparer who actually understands how they work. I’m always getting requests for referrals, so I turned to my readers for help. These are the tax preparers that my readers have recommended. I have not personally worked with any of them and have done no research or due diligence, but they each have at least one happy pastor client. Bret Willoughby, CPA Yahr Income ...

https://youtu.be/z1f72R1aOCE Pastors are dual-status taxpayers who pay Social Security and Medicare taxes as if self-employed. But do you really have to pay the full 15.3% or is there a waiver available for clergy?

If you are a church employee, you may have to file Schedule SE (even though you're not self-employed) and pay double payroll taxes. This is why. View post

https://youtu.be/rxAM8VRzFlI Does the way you pay your taxes affect your ability to claim a housing allowance? What determines if you can claim a housing allowance or have to pay self-employment taxes? Do you have to pay taxes on the housing allowance?

Here at Pastor’s Wallet, we talk a lot about the clergy housing allowance because it’s such a unique benefit for pastors. In fact, I even wrote a book on the topic, as you can see from the above graphic. Today, we are going to talk about how the housing allowance affects Social Security benefits.  You see, your housing allowance is considered compensation for your ministerial services. However, there are a lot of different programs that use compensation numbers and only about ...

https://youtu.be/9VV0m-JA9HE There is only one time when a gift to a pastor can be tax-free, and that is at retirement IF certain IRS criteria are met.