Remember, ministers usually have a dual tax status and should be treated as employees for income tax purposes and self-employed for Social Security purposes with respect to their ministerial earnings.
Sometimes it’s difficult for churches to decide if other paid workers are employees or independent contractors. Employers should generally err on the side of treating workers as employees if they aren’t sure. If a church treats a worker as an independent contractor and the IRS later reclassifies that worker as an employee, the church could face substantial fines.
For more information about how the IRS decides if a worker is an independent contractor or employee, see IRS Publication 15-A, Employer’s Supplemental Tax Guide (Supplement to Publication 15 (Circular E), Employer’s Tax Guide), on the IRS Web site at http://www.irs.gov.
These facts suggest to the IRS that a worker is an employee instead of self-employed:
Workers don’t have to meet all of these factors to be considered an employee. If they meet most of them, the IRS will consider them to be employees. That’s why churches should treat workers as employees rather than independent contractors if they are in doubt.
For more information, visit GuideStone.org/TaxGuide