Is the housing allowance for a minister subject to Social Security Tax and Medicare Tax under FICA?
The entire amount of a minister’s housing allowance is subject to social security and Medicare taxes, even though it may be excluded from taxable income for income taxes. A minister’s compensation for services as an employee, as well as from self-employment, is subject to Self-Employment Contributions Act (SECA) taxes, not the Federal Insurance Contributions Act (FICA). Under SECA the self-employed person pays all the taxes while under FICA the employer and employee each pay half of the taxes. However, if you are a duly ordained Commissioned, or licensed minister, or member of a religious order not under a vow of poverty, or a Christian Science Practitioner who elected and was approved for exemption from Social Security coverage and self-employment tax, your housing allowance would not be subject to social security or Medicare taxes under SECA.
The entire amount of a minister’s housing allowance is subject to social security and Medicare taxes, even though it may be excluded from taxable income for income taxes. The compensation (including a housing allowance) that a church pays to its duly ordained, commissioned, or licensed minister for performing services as a employee in the exercise of ministry is subject to Self-Employment Contributions Act (SECA) taxes, not the Federal Insurance Contributions Act (FICA) taxes. Under SECA the self-employed person pays all the taxes while under FICA the employer and employee each pay half of the taxes. However, if you are a duly ordained Commissioned, or licensed minister, or member of a religious order not under a vow of poverty, or a Christian Science Practitioner and you elected and were approved for exemption from Social Security coverage and self-employment tax, your compensation (including your housing allowance) would not be subject to social security or Medicare taxes under SECA.
