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Discussion:Can you treat a minister as an employee?

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Discussion Forum Index --> Tax Questions --> Can you treat a minister as an employee?

GRACE (talk|edits) said:

18 January 2006
Want to know if you can treat a minister as an employee and withhold ss and med. if the church treats him as an employee. Read through pub 517 and still not sure if they can withhold his ss and med. if they want to. He has not taken a poverty


ClarissaF (talk|edits) said:

18 January 2006
I've been handling payroll for a small independent Baptist church for 11 years. From what I've read and researched, it appears that in almost every case they cannot be treated as an employee. I've been able to withhold Federal and State tax and give our pastor a W-2 without SS and Medicare withholding. You could however increase the Federal withholding to cover both halves of the SS and Medi w/h. This could eliminate quarterly estimated payments. We've used this approach for quite a few years.

Riley2 (talk|edits) said:

18 January 2006
An ordained, commissioned, or licensed minister can never be an employee for FICA purposes (except for non-ministerial duties), although there is no problem with treating him as an employee for income tax purposes. See Sec. 3121(b)(8).

Gregg Gillaspy, CPA, CFP (talk|edits) said:

January 19, 2006
ClarissaF and Riley2 are pretty much on target with their advice. I handle numerous tax returns and payroll for churches and ministers.

LJACPA (talk|edits) said:

20 January 2006
Can an ordained minister get a 1099 instead of a W-2?LJACPA 08:48, 20 January 2006 (CST)

Dneuschwander (talk|edits) said:

20 January 2006
Whether or not a ministrer is an employee (W-2) or self-employed (Form 1099-MISC) can be a complex issue. There are at least four recognized tests for determining whether a minister is an employee or self-employed for federal income tax reporting purposes. These include (1) the "common law employee" test forth in the income tax regulations; (2) the "20-factor" test announced by the IRS in 1997; (3) the "7-factor" test announced by the US Tax Court in 1994 in two cases addressing the correct reporting status of ministers; and (4) a "12 factor" test developed by the US Supreme Court and used by the Federal Appeals Court in a 1997 case addressing the correct reporting status of a minister.

Please note that the Tax Court has ruled that ministers who report their income taxas as self-employed wll be reclassifed as an employee if their church issues them a W-2 form instead of a Form 1099-MISC.

I highly suggest that you consider purchasing "Church & Clergy Tax Guide" by Richard R. Hammar. It is a great resource on this very topic and is very reasonable priced - $19.95. Visit or call 1-800-222-1840

Bean (talk|edits) said:

29 January 2006
I've read from an IRS publication somewhere that an ordained or licensed minister can file a form (within certain time) to exempt from not withholding FICA and once filed it is irreversable.

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