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Tax Planning Rules for Ministers

Ministers are individuals who have devoted their lives to teaching, edification, and service to their church and other people. While some ministers may be excellent teachers, pastors, and mentors, many are unfamiliar with the special tax laws applicable to ministers. First, ministers may exclude from federal taxable income amounts designated as housing allowances by their church or organization. Second, ministers may be simultaneously classified as employees for federal taxes and self-employed for Social security and Medicare taxes, a situation known as "dual tax status." Third, ministers are exempt from federal tax withholding but often find it favorable to elect to have taxes withheld. ...

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