An associate pastor is treated as an employee of a church that exercises very substantial control over the daily activities of his work. Must he be considered self-employed even though he has no liberty that is typical of an independent contractor?
Because an associate pastor is a minister of the church, he is considered an employee of the church in every area of employment except for purposes of social security and Medicare (FICA tax), and federal and state withholding. Federal and state withholding is elective by the pastor/employee, but FICA tax is not. The church will report his earnings on Form W-2, but it will not pay the typical employer's portion of FICA. He is responsible for self-employment tax (see Minister Audit Techniques Guide). For this reason, pastors are called dual status employees.
See this post for further clarification: