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New MinisterWeekly Lessons

Continuing education for ministry leaders
New Minister
Weekly Lessons, created and written by Richard R. Hammar, J.D., LL.M., CPA, give you a basic legal overview of essential topics based on staff or volunteer positions within a church.

Previous Lessons

Week of October 7

Who is a Minister?

This Week's LessonWeek of September 30

Should I Report My Income Taxes as an Employee or as Self-Employed?

Introduction

This lesson focuses on the issue of employed status for federal income tax purposes. This is an important issue for anyone just beginning his or her ministry. You can review the Executive Summary to obtain the key points or read the lesson for a more thorough presentation of this topic. Start by completing the following quiz to test your knowledge.

Executive Summary

Most new ministers should report their federal income taxes as employees, because they will be considered employees under the tests currently used by the IRS and the courts. Most clergy will be "better off" reporting as employees, since (1) the value of various fringe benefits will be excludable, including the cost of employer-paid health insurance premiums on the life of the minister, (2) the risk of an IRS audit is substantially lower, and (3) reporting as an employee avoids the additional taxes and penalties that often apply to self-employed clergy who are audited by the IRS and reclassified as employees.

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