One option for a pastor is to file taxes with the Internal Revenue Service as a self-employed clergy member. This requires both Social Security and Medicare taxes to be paid by the pastor. According to IRS guidelines, a pastor is considered self-employed if a church does not have control over the pastor's employment status or activities. When a pastor is given a housing allowance or provided a parsonage, the IRS does not require this compensation to be reported as taxable income. However, housing allowance pay, including an estimated value of the parsonage on the rental market, must be noted on self-employment income when calculating Social Security tax.
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