@joshwats wrote:
Thanks.
1. Ok, I'm guessing that I'm being taxed a SE tax of about $15k for a total of 102k income. And the rest of the taxes that bring the taxes from 15k up to 19k are a 4k of income tax on $41k taxable income.
2. And when it comes to the discrepancy between my 82k salary with the church but my taking home 73k through paychecks, with $6,700 federal taxes withheld in '24, the remaining $2,300 or so must be state taxes that have been withheld.
---- Does all the above make sense given what I've provided?? ----
3. Finally, is it still possible for me to opt out of Social Security? I was told it had to be done within the first few years, but is that opportunity still available to me?
Thanks!
1. Your income subject to income tax is about $79K. Income subject to SE tax is your taxable income plus your non-taxable housing allowance, which equals $102K.
2. If your gross pay was supposed to be $82K (salary plus housing allowance) and your net paychecks add up to $72K, you need to look for $10,000 of subtractions. That could be federal tax withholding (box 2) and state tax withholding (box 17). It could also be deductions for health insurance premiums or for retirement plan contributions, or other similar items. You will have to confirm with your church.
3. I am not an expert on this particular form, but I read the instructions the same way you do. Assuming you have been a pastor for more than 2 years, it seems you have missed your window. (this is the first year using turbotax but not your first year preparing taxes as a pastor, maybe?) How have you filed your taxes in the past?
One thing is that the clergy rules apply when you are performing ministerial duties (you are licensed, perform sacraments, direct worship, etc.). My church had an assistant pastor who was not licensed in our denomination (needed to take a couple of seminary courses before being allowed to transfer his license from another denomination), so he was not considered clergy for IRS purposes (could not perform sacraments) and he was paid as a regular lay employee. The special rules (housing allowance, SE tax, etc) only start to apply when you are actually performing the duties and responsibilities of a pastor in your denomination.
I bring this up because you say you have been a pastor for a while but you seem unfamiliar with all the special rules and situations. If you have been an assistant pastor not in a sacramental role (and being paid as a lay employee), and only recently transitioned to a full pastoral role eligible for a housing allowance and so on, then you might still be within that 2 year window for tax purposes. It depends on how you have been paid and how you filed your taxes in the past. Do you have a schedule SE attached as part of any of your prior tax returns?
