Church Payroll Service
A pastor has a dual status for tax purposes that he is an employee for the Income Tax purpose and a self-employee for the Social Security Tax and the Medicare Tax purposes. Being a self-employee, a pastor should pay for 15.3% self-employment taxes alone and he has to pay for his self-employment tax and Medicare tax quarterly through 1040 ES payment vouchers. But being an employee, he needs to receive a W-2 form from his church. And the IRS exempts the Federal Income Tax on the housing allowance. All these special treatments of a pastor make things very complicated with payroll, W-2, and Form 941. We know how to do them according to the IRS guideline.
Pastor's Tax Return
A pastor is an employee and self-employed for the tax purposes, which requires a pastor to receive W-2 from his church and to file Schedule C. Not many tax preparers know that. If you want to find out whether your tax preparer knows or not, ask three simple questions.
1) Is housing allowance a taxable income for the Federal Income Tax?
Answer: No. Pastor's housing allowance is exempt from the Federal Income Tax, which is a special benefit exclusively to an ordained or licensed pastor by the church.
2) Is a pastor a self-employed?
Answer: Yes. Since a pastor is treated as a self-employed, he has to pay all 15.3% of Social Security Tax and Medicare Tax alone.
3) Should a church withhold pastor's Federal Income Tax?
Answer: No. A pastor has to pay his taxes through 1040 ES vouchers quarterly.
If your tax preparer fails to answer correctly one of the questions, he/she is not a specialist for clergy tax return. We can help you better.
We Do Small Businesses and Individuals, Too!
We are specialists for churches and pastors, which simply means that we can do both them and you well.
Give Us A Chance to Serve You!
We are located in Melbourne, FL. However, with the help of an advanced internet technology, we can help you wherever you are! Just email us your tax return of 2019, copy of your driver's license, your social security card, and other necessary information for 2020 tax return.
Tax Specialist: Dong Eun Kim, Enrolled Agent
Tax Specialist: Bokman Han, Enrolled Agent