Clergy pay social security as self-employed

Determining the correct social security tax for clergy is often confusing. Clergy pay social security tax under the Self-Employment Contributions Act (SECA), not under the Federal Insurance Contributions Act (FICA). Clergy engaged in the exercise of ministry are always treated as self-employed for social security tax purposes. A congregation should never deduct FICA tax from the pay of a…

Read More
It’s Time To Stop Making Payroll Mistakes

Payroll is complicated. There are a lot of tasks, laws, forms, and calculations. With so many things to remember, it’s easy to make a mistake. You should not take payroll errors lightly. Mistakes can result in penalties, interest, and even jail time.  The best way to avoid payroll mistakes is by knowing what to look…

Read More
Can employees take home old computers for free?

Question: Our church just completed a major upgrade of everyone’s computers. The computers that were replaced were ancient by today’s standards. Rather than throw them out, one staff member suggested that employees take their old computers home. He also said that since the computers are old, we don’t have to worry about taxes. The church board is uncomfortable with this nontaxable suggestion….

Read More
What should the church include as income on a pastor’s W-2?

The first thing to understand is that the income tax code takes the position that any money paid to or for an employee is income unless specifically excluded by the tax code. In addition to the pastor’s base salary, there are some items the church may provide as fringe benefits to the pastor or other employees that…

Read More
Is a Pastor’s Retirement Gift Taxable?

Federal tax law requires all forms of compensation to be reported as taxable income unless specifically excluded by law. Gifts are one such exclusion. The question, then, is whether retirement gifts are taxable compensation for services rendered or tax-free gifts. This an­swer is not always clear. In a series of cases in the early 1950s,…

Read More
When do I use Form W-9?

When a church hires a worker, one of the initial decisions that must be made is whether to treat the worker as clergy, non-clergy employee or contractor. This decision may seem insignificant, but it has huge implications when it comes to payroll. When you hire a new employee, you need to fill out paperwork to…

Read More
The best way for your church to track employee hours

Start saving time and avoid costly errors by automatically calculating total hours worked. Here are five time-saving things your church can do when implementing time sheets or a time clock. Collect employee data faster — There’s nothing more frustrating to a payroll administrator than waiting for, or chasing down, employees to get what’s needed to process payroll. Time sheets and…

Read More
Can we classify our administrative assistant as a contractor?

Question: We want to hire an administrative assistant. Can we classify this person as an independent contractor during a 90-day try-out period and then, if they work out, hire them as a full-time employee at the end of the 90 days? Answer: It’s highly unlikely that an administrative assistant would meet the criteria for classification…

Read More
Understanding Clergy Employment-

Churches are required to classify each person that is hired as either a secular or clergy employee. This is a very crucial step in the hiring process. Clergy are taxed differently than secular employees and this treatment is mandated by law. It isn’t optional, so it is important to know who qualifies as secular or…

Read More
The Most Common W-4 Questions

In many cases, you probably don’t even think about it past your first day of work. But then something happens – you get married, start a new job, ordained or licensed, have a baby – and you need to take a closer look. That’s when your mind starts scrambling with questions. Below, you’ll find the…

Read More