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reverend lincoln receives an annual salary of $24,000 as a full time minister. this includes $2,000...

reverend lincoln receives an annual salary of $24,000 as a full time minister. this includes $2,000 as rental allowance to pay utilities. he is not exempt from self employment tax. how much must he include when figuring net income for self employment tax?

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Answer #1

For Self Employment Tax of Ministers (i.e. Clergymen)

1. Rent Allowance (also known as Parsonage Allowance) - It is allowed as deductions only for income tax purposes, not self employment tax. Hence it is to be included in net income.

2. Self Employment tax = 15.3% of Net Income, which is 12.4% (Social Security Tax) and 2.9% (Medicare Tax)

Hence for Reverend Lincoln Net Income for Self Employment Tax = $ 24,000

Self Employment tax = 15.3% of Net Income = 24,000 x 15.3% = $ 3,672

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