Please be sure NOT to take FICA Taxes (Social Security & Medicare Taxes) from the Priest’s gross salary. Priests pay self-employment tax instead of FICA taxes.
Priest pay is subject to Federal & State taxes. A priest can pay Federal tax quarterly on his own or have the tax deducted from his pay each pay period.
Be sure the priest understands that what he pays in on Federal self-employment tax each year will set & determine his monthly social security payments when he retires. Paying self-employment tax at a low rate each year through his career will negatively impact retirement income later.
- Non-Taxable – compensation for actual miles driven that are documented and/or compensation based on receipts for car expenses.
- Taxable – compensation without monthly receipts or documentation.