Income Tax Reporting for Ministers

Income Tax Reporting for Ministers — 2026 Filing Season Guide (2025 Income)

Ministers file taxes under unique dual rules — they are employees for income-tax purposes but self-employed for Social Security (SECA).
This 2026 Filing Season guide (covering 2025 income) explains how clergy report income on Form 1040 and Schedule SE, manage voluntary withholding or estimated tax, and apply the latest 2025 law changes from the One Big Beautiful Bill Act (OBBBA) and IRS updates.

1️⃣ Filing Requirements for 2025 Income

For the 2026 tax season (reporting 2025 income), the filing thresholds reflect OBBBA inflation adjustments and the new Senior Deduction.

Single / MFS: $15,750 gross income or more
Married Filing Jointly / Qualifying Widow(er): $31,500 or more
Head of Household: $23,625 or more
Additional Senior Deduction: $6,000 per taxpayer age 65 or older

Ministers must file even below these amounts if they have ≥ $400 net self-employment earnings and no Form 4361 exemption.
Churches electing out of FICA via Form 8274 may trigger SECA filing if wages ≥ $108.28.

2️⃣ Withholding vs Estimated Payments

Churches generally do not withhold income tax for ministers’ services, so most clergy must remit quarterly estimated tax (Form 1040-ES) to cover both income and SE tax.
Payments are required if expected combined tax due exceeds $1,000.

EA Tax Tip 💬
Ministers may sign a voluntary withholding agreement with their church to have income tax withheld.
It does not cover Social Security tax but simplifies budgeting and avoids estimated-tax penalties.

3️⃣ W-2, Schedule C and Schedule SE Reporting

Ministers usually receive a W-2 showing their salary but no FICA withholding. They compute and pay the 15.3% SE tax on Schedule SE.
Non-employee fees (guest preaching, seminars) go on Schedule C.
If Form 4361 exemption is pending, SE tax still applies until approved.

Example 💡
Rev. M receives $60 000 salary and a $20 000 housing allowance (Box 14).
Income tax applies to $60 000 only, but SE tax is calculated on $80 000 (salary + housing).
If Form 4361 is approved, no SE tax is owed on that income.

4️⃣ Deductions and Adjustments for Clergy

Ordinary and necessary ministry expenses — books, travel, education, professional supplies.
Self-Employed Health Insurance Deduction (Schedule 1, line 17).
½ of SE tax deduction (Schedule 1, line 15).

EA Tax Tip 💬
Expenses tied to tax-free income (such as housing allowance) are not deductible. Keep detailed records for mixed expenses.

5️⃣ 2025 Return Examples

Example 💡
Minister N earns $45 000 salary + $15 000 housing allowance and spends $14 000 on housing and $3 500 in deductible expenses.
→ Income tax base = $45 000 only (housing exempt).
→ SE tax base = ($45 000 + $15 000 − $3 500) = $56 500.

EA Tax Tip 💬
Keep mileage logs and receipts for conferences and visitation travel.
2025 standard mileage rate is 70 ¢ per mile.

💬 Frequently Asked Questions

Q1. Is withholding required for ministers? → ❌ No, but voluntary agreements are allowed.

Q2. If I have Form 4361 exemption, do I still file Schedule SE? → ❌ No, write “Exempt – Form 4361” on Schedule 2 (Form 1040), line 4.

Q3. Does housing allowance go on Schedule C? → ❌ No, it belongs on W-2 (Box 14) and is excluded from income if designated in advance.

Reference Links

📗 Church & Ministry Tax Series (2025)

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