Which option for clergy self-employment tax?

[zaclanger]

I'm a pastor serving a local church, and I have a salary and housing allowance. My wife and I did the calculations at the start of last year to determine how much my social-security, medicare, and federal income taxes would be and voluntarily withheld them on her W4. My question is, which option should I choose on the question, "How would you like us to calculate your clergy self-employment tax?"

1. Pay self-employment tax on wages only

2. Social Security and Medicare taxes have been withheld

3. Pay self-employment tax on housing allowance only

4. Pay self-employment tax on wages and housing allowance

5. This income is exempt from self-employment tax

I would guess that option two is correct, since we have already done the voluntary withholding, but I'm not sure. I appreciate the help!

[DawnC]

Withholding on her W-4 won't affect how your earnings are taxed.   How did you get paid for your services, W-2, 1099, or both?   If you received a W-2, is there anything withheld in Boxes 4 and 6?  And finally, was your housing allowance included in Box 1?  

Clergy Taxation Discussion  -  Here is a discussion that should help! 

 Members of the clergy (ministers, members of a religious order, and Christian Science practitioners and readers) and religious workers (church employees) must pay self-employment tax (SE tax).   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.

Related Information:

• Is a parsonage or housing allowance deductible?
• What is the self-employment tax?