Tuesday, February 19, 2019

Hey Fletch … It’s been one month after I got your answer to my question. I still don’t have my head wrapped around this issue of FICA vs. SECA and how it relates to Housing Allowance.

Can a church choose to pay the 7.65% FICA to Social Security for a pastor? That is what my employer is claiming to be doing. Our church said we pay the extra 7.65% FICA for the employer’s share.

We have 3 pastors who have opted out of social security and 3 of us have not. For those who have not, the church is saying they are paying their half for us.

DRF—FICA and SECA relate to the status of an employee. Ministers who are licensed, commissioned or ordained, and in a ministry role in their church, must pay SECA. All other employees pay FICA. 

For a pastor, if the church pays half of SECA (7.65%), then this must be considered taxable income to the pastor. It is essentially a bonus to help pay the self-employment tax.

Response—Now I understand it. The payment is what you earlier called a “SECA bonus.”