Pastoral Salary & Benefits / How to Handle Pastor's Pay 

 

I.R.S guidelines state that Ordained Clergy are SELF-EMPLOYED, but are considered an employee who receives a W-2.  Pastor wages are EXEMPT from Social Security and Medicare withholdings but pastors pay SELF-EMPLOYMENT TAX / SECA (15.3% of salaries and wages plus housing). 

Federal and State withholdings are NOT required, but CAN be handled by the church if desired and have the church has the ability to do so.  Churches with a Payroll Service can handle this for the church and pastor.  Contact the Conference office if you have questions about this.  Payroll Service Options

For assistance in calculating Pastor's SECA & Pension, click here for Excel spreadsheet: Pastor Salary Calculator  Contact Jody at 317-832-8442 for further assistance.

Housing Benefit amounts are to be approved by the church BOA and noted in the BOA minutes annually PRIOR to each calendar year.  

  • A minister's housing allowance (sometimes called a parsonage allowance or a rental allowance) is excludable from gross income for income tax purposes but not for self-employment tax purposes.  For more information, see 2019 Publication 517 (irs.gov)
  • Here is a worksheet including the allowable housing allowance items for ALL Pastors. FREE METHODIST CHURCH OF NORTH AMERICA (fmcusa.org) 
  • IRS defines Ministers as: individuals who are duly ordained, commissioned, or licensed by a religious body constituting a church or church denomination. Ministers have the authority to conduct religious worship, perform sacerdotal functions, and administer ordinances or sacraments according to the prescribed tenets and practices of that church or denomination. If a church or denomination ordains some ministers and licenses or commissions others, anyone licensed or commissioned must be able to perform substantially all the religious functions of an ordained minister to be treated as a minister for social security purposes. 
  • employee forms, Pension & Retirement forms & housing forms  FMCUSA HR FORMS

 

Wabash life, ltd and ad&d Benefits for Full-Time Pastors

Summary of Wabash Life Insurance Benefits

 

Pastor's Professional Expenses CANNOT BE TREATED AS PART OF A PASTOR'S SALARY PACKAGE and must be handled under an Accountable Plan.  If not reimbursed under an Accountable Plan, the employer must include all reimbursements as income on your W-2 form.  Accountable Reimbursement Plan Guidelines

FAQ - Accountable Reimbursement Plans