Pastors salary on form 941

[astrunk1]

In going through the Form 941 assistant, it looks like the pastor's salary is included in the calculations for tax owed. I was under the impression that the pastor is required to send in his own quarterly tax (separate from the other staff payroll). Have I done something wrong in the payroll setup?

[NeilZ]

In going through the Form 941 assistant, it looks like the pastor's salary is included in the calculations for tax owed. I was under the impression that the pastor is required to send in his own quarterly tax (separate from the other staff payroll). Have I done something wrong in the payroll setup?

The Pastor's salary is taxable under Federal Income Tax, however they Pastors are required to pay SECA, Self-Employment Contributions Act taxes. Basically, its Social Security & Medicare taxes for self-employed persons.

You should have the Federal Income Tax pay item listed on the Pastor's Salary if he has decided to have Federal Income Tax Withholding done on his pay, but you should not have the Social Security and Medicare pay items listed.

[dtroutman]

I ran into this same problem last night and noticed I had the pay items incorrectly setup. You may want to check in 'Maintain Item Descriptions' (in payroll module) that all your minister salary items that are taxable for W2 purposes have the box 'Tax Options' set to 'more options'. When you select 'more options' you are then given a list of items you want to be taxable, you will need to uncheck 'Medicare' and ' Social Security'. You will need to do this for each minister pay item that is probably set to 'taxable', which is what I had done. Hope this helps.

[NeilZ]

I actually have a image of what you need to look for in another thread:

viewtopic.php?f=3&t=5570

This thread gives you the basic setup.

Hope this helpsl.