This Week's LessonWeek of June 10
This lesson examines the topic of withholding taxes of ministerial employees. The Executive Summary provides a concise review of the key points. Before we get started, test your knowledge by completing the following quiz.
Ministers are exempt from federal tax withholding, whether they report their income taxes as an employee or as self-employed. However, if they report their income taxes as an employee, they may request "voluntary withholding" of their income taxes and self-employment taxes by filing a Form W-4 with the church. A self-employed minister is free to enter into an "unofficial" withholding arrangement whereby the church withholds a portion of his or her compensation each week and deposits it in a church account, and then distributes the balance to the minister in advance of each quarterly estimated tax payment due date