Q&A: Ministers’ Withholding Requirements

Should we withhold federal income tax and social security taxes?

Elaine Sommerville

For payroll, should we treat the portion of a minister’s salary not designated as housing allowance the same as any employee’s salary? Should we withhold federal income tax and social security taxes on that portion and pay the employer’s share of social security?
Wages paid to a minister performing ministerial services are never subject to FICA/Medicare through withholding and employer matching. The employer may withhold federal income tax from the minister’s pay, if the minister has agreed to federal withholding. Federal income tax withholding is not mandatory as it is with other employees. A minister’s taxable wages should be reported on Form W-2. The minister’s Form W-2 should only have wages reported in Box 1 with any federal income tax withheld reported in Box 2. The minister’s Form W-2 should never report amounts in Boxes 3, 4, 5, or 6.

For more help with tax-related questions, see Richard Hammar’s annual Church & Clergy Tax Guide.

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