Voluntary Withholding Agreement (Clergy)

Definition

An arrangement in which a minister and their employing church agree to have the church withhold federal income tax from the minister's wages, even though the minister is not subject to mandatory FICA withholding. Because ministers are self-employed for FICA purposes, this voluntary withholding is often structured to cover both income tax and the minister's self-employment tax liability. Without such an agreement, ministers typically must make quarterly estimated tax payments to avoid underpayment penalties.