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Catholic Diocese paid Father's 6 mo. sabbatical on W-2 and…

Catholic Diocese paid Father's...

Catholic Diocese paid Father's 6 mo. sabbatical on W-2 and withheld Federal Income Tax. Are these wages subject of S-E tax same as

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Are these wages paid for sabbatical subject to S-E tax?

Accountant's Assistant: Is there anything else important you think the Expert should know?

The Father pays S-E tax on Wages reported on W-2 from the Church.

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10/3/2017
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Tax.appeal.168, Tax Accountant
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Hello. Thank you for choosing this Q&A service for assistance. My name is Angela. I will be assisting you.

Issue: Catholic Diocese paid Father's 6 mo. sabbatical on W-2 and withheld Federal Income Tax.

Issue A1: Federal tax was not supposed to be withheld. SEE BELOW:

--------------------------

Whether they are classified as employees or as self-employed for federal income tax purposes, clerics are exempt from federal tax withholding.

REFERENCE SOURCE:

https://www.journalofaccountancy.com/issues/2004/oct/taxplanningforservantsofgod.html

The wages are subject to SE tax. SEE BELOW:

----------------------------

The following income is included in the SE tax calculation on Schedule SE:

  • Salaries and fees for your ministerial services
  • Money for marriages, baptisms, funerals, masses, etc.
  • The value of meals and lodging provided to you, your spouse, and your dependents
  • The fair rental value of a parsonage (including the cost of furnished utilities) or the rental allowance (including an amount for utilities)
  • Any amount a church pays toward your income tax or SE tax, other than withholding the amount from your salary.

Clergy housing is only included as income when determining your self-employment taxes, not when calculating your federal income tax.

You aren’t required to pay SE tax when any of the following applies:

  • You’re a member of a religious order that has taken a vow of poverty.
  • You have requested, and the IRS has approved, an exemption from self-employment tax.
  • You are subject only to the social security laws of a foreign country under the provisions of a social security agreement between the United States and that country.

REFERENCE SOURCE:

https://ttlc.intuit.com/questions/1901472-is-my-clergy-income-subject-to-the-self-employment-tax

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