My church withholds FICA from my pastoral compensation and matches the FICA. While I have heard that I am not subject to FICA as a minister, my church treasurer says the government is getting its money either way and there is no problem treating me as subject to FICA. Is my treasurer correct?
Your treasurer is correct that the government gets the correct amount of money either way. However, ministers are not subject to FICA and by withholding FICA and matching it, the match amount gets treated as tax-free, when it is fully taxable. This improper process results in your underpayment of income tax because the matched amount is not reported in compensation on the Form W-2.
Dan Busby, President of the Evangelical Council for Financial Accountability (ECFA), is a nationally recognized author and speaker and a member of the Commission on Accountability and Policy for Religious Organizations.