Clergy Tax Facts
Clergy Tax Tip:
Clergy are exempt from tax withholdings but churches are allowed to withhold taxes from a clergy's wages if the clergy requests it. This is known as "optional withholding." The "optional withholdings" would be in lieu of making quarterly payments. The correct amount of tax withholding for a clergy cannot be found on a tax table. It is completely dependent on the taxpayer's tax liability. That amount would need to be calculated by a knowledgable clergy tax professional.
Clergy Voluntary Withholding Agreements
Ministers can arrange to have income taxes (but not social security taxes) withheld from their compensation by means of voluntary withholding agreements with their employers. If the employer agrees to such an arrangement, the minister must furnish the church with a Form W-4, and the church will then withhold on the basis of the standard withholding tables or a fixed amount based on each pay period. The agreement between the ministers and the church must be in writing and must contain (1) the name, address, and social security number of the minister, (2) the name and address of the church, and (3) a statement that the minister desires the withholding of income tax. The agreement may be terminated at any time by means of a written statement.
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Get a better understanding of U.S. tax laws as they relate to pastors and churches with the Church & Clergy Tax Guide |
Every church and its employees want to feel confident that their compensation plan is reasonable and fair. |
To accomplish your church's mission and vision for ministry you need to effectively manage your church's finances |
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Clergy should not view this information as a substitute for professional advice. This information is subject to change, due to administrative rulings or interpretations and or technical corrections by the IRS. If legal advice or other expert assistance is required, the services of a competent clergy tax professional person should be sought.
