This Week's LessonWeek of December 8
This lesson examines how new ministers should pay their estimated taxes. The Executive Summary provides a concise review of the key points. Before we get started, test your knowledge by completing the following quiz.
Ministers' compensation is exempt from federal income tax withholding, whether they report their income taxes as employees or as self-employed. Ministers must prepay their income taxes and self-employment taxes using the estimated tax procedure (unless they elect voluntary withholding, which is addressed in another lesson in this series for new ministers).
New ministers should be familiar with the estimated tax reporting procedure for the following reasons:
• The wages of ministers who report their income taxes as employees are exempt from federal income tax withholding, and so these ministers must prepay their taxes using the estimated tax procedure (unless they request voluntary withholding).