How is the compensation of clergy members treated differently for tax purposes?

The compensation of clergy members is treated as self-employment income for tax purposes, which subjects it to self-employment tax. This means that clergy members must pay both the employer and employee portions of Social Security and Medicare taxes on their income since they are considered self-employed for tax purposes.

While they may have certain exemptions or deductions available related to their ministerial duties, the fundamental aspect that differentiates their compensation is this self-employment tax obligation. Other forms of income may not carry the same tax implications, particularly for employees whose taxes are withheld by their employer. By treating clergy compensation as self-employment income, it ensures that they are contributing to Social Security and Medicare in a manner consistent with their status as independent contractors performing their duties.