What is the filing requirement for compensation of clergy members?

Clergy members typically have a unique tax situation when it comes to their compensation. They are generally considered self-employed for tax purposes, even if they receive a paycheck that appears to be similar to a regular employee's compensation. As such, they are required to pay self-employment tax on their earnings, which includes their wages as well as any additional income they may generate from activities such as officiating weddings or conducting funerals. This requirement stems from the IRS's classification of ministers and clergy as self-employed individuals, which means they are responsible for reporting their income and paying self-employment tax accordingly.

In addition to self-employment tax, clergy members may also have withholding requirements, but their primary tax obligations differ significantly from those of traditional employees. Understanding this distinction is crucial for tax preparers, as it influences how clergy are advised on their tax filings and the payments they are obligated to make.