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Is Our Pastor A Church Employee?

 

From time to time people call asking if the pastor is a church employee.  Depending on what the question, the answer could be "yes" or "no" -- but it usually is "yes."

 

ACCORDING TO THE IRS, YOUR pastor definitely IS a church employee.  They are to receive a W-2 at the end of the year for all wages paid.  HOWEVER, there is a Social Security statute that says even though the pastor is a church employee, for the purposes of social security taxation alone the pastor is treated as self-employed.  This means the church is prohibited from withholding or paying FICA taxes on their clergy.  The church MAY withhold regular income taxes, but is not required to do so.

 

If your pastor is a lay supply appointment, they do not meet the standard of "clergy" for the United Methoist Church, and so the church must treat them as they do any lay employee (including withholding taxes and paying FICA taxes).  Lay supply pastors do not benefit from housing allowance regulations.

 

There are NO CIRCUMSTANCES where appointed pastors in the South Georgia  Conference are independent contractors.

 

THE DEPARTMENT OF LABOR will treat your pastor as a church employee.  They are covered by applicable labor regulations.  Conference rules REQUIRE the church to have Worker's Compensation insurance on the pastor.

 

IN THE LOCAL CHURCH, it depends.  If your local church has a personnel manual or personnel policies, the SPRC may require that pastoral staff abide by those regulations in the same manner that other church employees do.  HOWEVER, The Book of Discipline and the Standing Rules for the annual conference provide some specific requirements (such as vacation, continuing education, and attendance at sessions of the annual conference) which the church may not restrict or replace.

 

Do We Really Have To Do This?

Sometimes people think that because we are a church, we're not subject to these tax and labor laws -- not so! There are numerous current cases where churches are being fined for failing to follow IRS payroll rules.   Sometimes people are just aggravated about the bother of it all, and don't want to go through the hassle!  People have said to me, "Well, we never had to do it before."  (Which really means either we never knew about it before or we've never been caught and penalized for not doing it.)  I go back to the teachings of our Lord.  Jesus was asked specifically about whether or not disciples needed to obey secular laws.  His reply was clear and unequivocal:  Then He said to them, “So give back to Caesar what is Caesar’s, and to God what is God’s." (Mt 22:21) Our obedience to these laws is a form of our obedience to our Lord.

 

More Resources

You can find out more about how to do the W-2 from this page.

 

We provide resources concerning tax details for clergy and local churches here.

 

If you'd like help determining if any other persons you pay are employees or independent contactors, look here. It is likely that most of the people whom the church pays are actually employees.

 

Disclaimer: The South Georgia Conference does not engage in offering direct tax advice to clergy or congregations. The South Georgia Conference Office of Administrative Services has provided the content of this page for general informational purposes only. You should not substitute this information for personal consultation with a qualified professional in the field, nor should you solely rely upon this information in taking any action. 

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