When confronted with the additional self-employment tax burden that clergy face, many ministers ask the question “Can I just tell my church to tax me as a normal employee?”
Unfortunately, whether you are taxed as a Minister is determined primarily by the functions of the position. IRS lists five criteria to determine if a position should be taxed as a Minister:
- Ordained, Licensed, or Commissioned
- Administers Ordinances or Sacraments
- Conducts Worship
- Performs services in the “control, conduct, or maintenance of a religious organization”
- Considered to be a spiritual leader by the related religious body Being ordained, licensed or commissioned is required.
In general, based on prior court cases and IRS audit guidance, a position will be treated as a minister for tax purposes if the individual is ordained, licensed, or commissioned as a minister, and the duties for which they were employed are those of a minister.
The employing congregation, denomination, integral agency of a denomination or a church, or religious organization must decide if a position meets the criteria of being taxed as a minister, and then they should use that treatment consistently. They cannot change the tax treatment of that position based on the request of the employee.
If you or your employer are unsure if a position should qualify as a minister for tax purposes, it’s ok. Clergy Financial Resources offers Pro Advisor Support for the low rate of $45.00 per 30 minute session, to help answer your difficult tax law questions. For more information, visit our website at https://www.clergyfinancial.com/resources/proadvisor/
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Clergy Financial Resources serves as a resource for clients to help analyze the complexity of clergy tax law, church payroll & HR issues. Our professionals are committed to helping clients stay informed about tax news, developments and trends in various specialty areas.
This article is intended to provide readers with guidance in tax matters. The article does not constitute, and should not be treated as professional advice regarding the use of any particular tax technique. Every effort has been made to assure the accuracy of the information. Clergy Financial Resources and the author do not assume responsibility for any individual’s reliance upon the information provided in the article. Readers should independently verify all information before applying it to a particular fact situation, and should independently determine the impact of any particular tax planning technique. If you are seeking legal advice, you are encouraged to consult an attorney.
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