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Employee's Ministerial Status Change in Mid-Year

Question:

A church employee was ordained as a minister mid-year. While a non-ministerial employee, the church withheld FICA taxes from the employee and paid the employer portion. Now that the employee is a minister, he will be paying his own Self-Employment (SECA) taxes.

Should the Form W-2 at the end of the year reflect $0 in boxes 3 and 5, Social Security and Medicare earnings respectively, or should the church report the SS and Medicare wages earned while the individual was a non-ministerial employee?

Answer:

In box 3—Social security wages, the preparer of the Form W-2 should show the wages subject to the social security tax. In box 5—Medicare wages and tips, the Form W-2 should show the wages subject to the Medicare tax. In this case, the amounts in boxes 3 and 5 will only be the wages earned when the employee was classified as non-ministerial.

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