Minister's Tax DVD Now Available
God, Government and Me - Clergy Taxes Made Simple
Available through Human Resources for the price of $5.00 each
(includes shipping & handling)

The Free Methodist Church has partnered with noted author and Certified Public Accountant, Dan Busby, to create a video presentation that explains clergy related tax issues in laymen's terms.  Mr. Busby is the author of the Zondervan Minister's Tax & Financial Guide, updated annually.  In addition, Mr. Busby serves as an officer with the Evangelical Council for Financial Accountability.

The video is divided into four separate topics:

• Clergy Housing Allowance Issues
• Clergy Compensation and Fringe Benefit Issues
• Clergy Business and Professional Expense Issues
• Clergy Income and Social Security Tax Issues

The topics are fully covered in approximately 10 minutes each.  Dan Busby's clear and direct approach to addressing each issue makes the video educational, but also enjoyable.  With the examples provided on the video, most situations that a pastor will face in relation to tax issues are addressed.

Call us toll-free at 1-800-342-5531 or email us for your copy today!

Minister's taxes can be confusing!  Let us help direct you with information and helpful websites to make the job a little easier:

Housing Allowance:

An ordained minister can exclude income designated as housing allowance from gross income for income tax purposes.  However, it cannot be excluded from earnings reportable for social security tax purposes.  If you live in a parsonage, you may claim the fair rental value, plus utilities as a housing allowance.  In addition, a retired ordained minister can claim up to 100 percent of his/her pension from the Free Methodist Church of North America's pension plans as housing.  The Free Methodist Church of North America has no responsibility to determine eligibility for the housing allowance or to determine whether or not there are sufficient housing expenses to cover the amount claimed as housing.  That responsibility is the minister's.

Paying Taxes:

Most ministers are considered "self-employed" for social security purposes and an "employee" for income tax purposes.  Ministers pay social security under the Self-Employment Contributions Act (SECA) instead of under the Federal Insurance Contributions Act (FICA).  However, since ministers are considered "employees" for income tax purposes, they should be given a W2 versus a 1099 for their services as part of their ministry.

A church is not required to withhold income taxes from a minister's paycheck.  However, a minister can request in writing that the church do this voluntarily.  If the church withholds federal income tax sufficient enough to also pay for SECA, the tax should be reported as "federal income tax" on the W2.  The church would pay the withheld amounts directly to the minister who would then use the funds to make estimated tax payments. 

Estimated tax payments for income tax and self-employment tax are due quarterly on April 15, June 15, September 15 and January 15 (of the following year) if the minister does not have taxes withheld from the paycheck.

For other tax related questions, check out the IRS website:

www.irs.gov