In most cases, the church is a tax-exempt entity. That means the church, who is the minister’s employer, does not withhold income tax from the minister’s wages. However, in almost every other aspect of the law, ministers are considered employees.

What is Box 13 statutory employee?

Statutory employees have been declared employees under federal tax laws, but are independent contractors under common law. These workers are usually salespeople or have commission-based jobs.

A licensed, commissioned, or ordained minister is generally the common law employee of the church, denomination, sect, or organization that employs him or her to provide ministerial services.

What is the definition of a statutory employee?

Statutory employee definition. A statutory employee is an independent contractor who qualifies for employee treatment. Employers withhold the employee portion of Social Security tax and Medicare tax from a statutory employee’s wages. And, employers contribute the employer portion of Social Security and Medicare taxes.

When is a minister considered to be an employee?

Ministers are employees if they perform services in the exercise of ministry and are subject to your will and control. The common- law rules discussed in section 1 and section 2 should be applied to determine whether a minister is your employee or is self-employed.

How to know if our pastor would be considered a statutory employee?

I would check YES that they are a statutory employee because they have to be at work (service) at a time that was not specified by them That is control by others. That is one way to prove that they are a statutory employee. Good job. Tax Professional: ShawnA, CPA, Professor, CFP.

Do you pay taxes on income of a minister?

Whether the minister is an employee or self-employed, the earnings of a minister are not subject to federal income, social security, and Medicare tax withholding. However, even if the minister is a common law employee, the earnings as reported on the minister’s Form 1040 are subject to self-employment tax and federal income tax.