W-2 Church Employee - Do I Need to Pay Self-Employment Taxes on My Income?

I've been working as a staff member at a local church for about two years now and receive a regular W-2. My church doesn't withhold any federal income tax from my paychecks, but they do take out social security and FICA. I've been putting aside about 15% of each paycheck to cover my tax obligations come filing time. In the past, I've always just filed using my W-2 like any regular employee would. But I was talking to another church worker recently who mentioned something about church employees having to pay self-employment taxes if they make over $108 or something like that? I earn about $42,000 annually, so I'm definitely over that threshold. I'm confused because I thought self-employment taxes were only for 1099 contractors or people who run their own businesses. Since I get a W-2 and my employer already takes out FICA, do I still need to pay self-employment taxes? I don't want to mess up my taxes or end up owing a bunch of money I haven't been saving for. Can anyone clarify this situation for church employees like me?

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18 comments

Khalid Howes

•8M

You're confusing two different situations. There's a special rule for church employees, but it depends on whether your church has opted in or out of FICA taxes. Since you mentioned your employer already takes out Social Security and FICA from your paychecks, you're being treated as a regular W-2 employee. This means you don't have to pay self-employment tax because your employer is already handling the FICA withholding (which is essentially the employer and employee portions of Social Security and Medicare taxes). The special rule you're thinking about applies to church employees whose employers have opted OUT of FICA taxes. In those cases, if you earn $108.28 or more from a church in a year, you'd pay self-employment tax (using Schedule SE) but you'd still get a W-2.

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Khalid Howes

•8M

Yes, that's exactly right. Since your church is withholding Social Security and Medicare taxes (which will show up in boxes 4 and 6 of your W-2), you're being treated as a regular employee for tax purposes. You file your taxes normally using your W-2, and you don't need to worry about self-employment taxes or Schedule SE. Your friend might be working for a church that elected not to participate in FICA, which creates a different situation. That's why they would need to handle self-employment taxes despite getting a W-2.

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Ben Cooper

•8M

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Ben Cooper

•8M

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•8M

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Elliott luviBorBatman

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Demi Hall

•8M

Just want to share my experience as a church financial administrator. There are two different scenarios for church employees: 1) If the church participates in FICA (like OP's does), the employer and employee each pay half of Social Security and Medicare taxes, just like any other job. The employee files taxes normally with their W-2. 2) If the church opts OUT of FICA, the employee still gets a W-2 but must pay self-employment taxes using Schedule SE if they earn over $108.28 for the year. Ministers have completely different rules though! They're always considered self-employed for Social Security/Medicare purposes, even if they get a W-2.

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Demi Hall

•8M

For your husband's situation, it depends on whether he's officially ordained, licensed, or commissioned as a minister. If he is, then the church shouldn't be withholding Social Security and Medicare - ministers are exempt from FICA withholding and must pay self-employment tax regardless of W-2 status. If your husband is not officially considered a minister for tax purposes but just a regular church employee, and the church is withholding FICA taxes, then he files like a normal employee and doesn't need to pay self-employment tax.

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