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withholding taxes

Does this church pastor need to confess to the IRS?

November 27, 2024 By Liz Weston

Dear Liz: As a recent member of our church board, I just discovered our church hasn’t been paying Social Security or Medicare taxes for our pastor. I checked with our pastor and he hasn’t been making any payments either. This has been going on for six years. How do we recover?

Answer: Clergy are generally exempt from having Social Security and Medicare taxes withheld from their wages, notes Mark Luscombe, principal analyst for Wolters Kluwer Tax & Accounting. However, clergy typically must pay self-employment taxes, which include Social Security and Medicare, unless an exemption has been approved by the IRS.

Normally, employers and employees each pay 7.65% of the employee’s wages to cover Social Security and Medicare taxes. Self-employed people typically must pay both the employer and employee shares, or a total of 15.3%.

If your pastor has been filing taxes as a self-employed person, then he probably has been paying the appropriate Social Security and Medicare taxes. If he hasn’t, however, he may owe a substantial tax bill and should consider hiring a tax pro to help him amend his returns.

Filed Under: Q&A, Taxes Tagged With: clergy, FICA, Medicare taxes, Social Security taxes, withholding taxes

Tuesday’s need-to-know money news

May 21, 2019 By Liz Weston

Today’s top story: Why your financial aid may plummet after freshman year. Also in the news: 3 tricks to help you shop less, how FICA tax and other withholding taxes work on your paycheck, and why you should plan to retire even if you don’t plan on retiring.

Why Your Financial Aid May Plummet After Freshman Year
Preparing yourself.

These 3 Tricks Can Help You Shop Less
Curbing an expensive habit.

How FICA Tax and Other Withholding Taxes Work on Your Paycheck
What they are and how you can change them.

Plan to Retire Even If You Don’t Plan to Retire
Plans have a way of changing.

Filed Under: Liz's Blog Tagged With: college tuition, FICA, financial aid, Retirement, retirement planning, shopping habits, tips, withholding taxes

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