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Social Security - Part 1

• The United States Supreme Court has let stand a federal appeals court ruling that rejected a challenge to the treatment of churches under the social security program. As noted in the November-December 1987 issue of Church Law & Tax Report, churches are free to exempt themselves from the employer's share of social security (FICA) taxes by filing a timely exemption application (Form 8274), but only at the cost of significantly increasing the tax liability of their nonminister employees who are thereafter treated as self-employed for social security purposes. Many churches that waived their liability for the employer's share of FICA taxes have had to increase the compensation of their nonminister employees in order to offset the significant increase in taxes that such persons experience because of the church's election (i.e., an increase from 7.51% of wages to 13.02%). This dilemma, ...

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Posted:
  • July 1, 1988

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