A voluntary withholding agreement is an agreement whereby employers and employees agree to allow the employer to withhold a certain amount from the worker`s pay slip. Employees may voluntarily choose to withhold public and federal taxes on their payroll reviews through these agreements, instead of paying the full tax bill at the end of the year. Although these agreements are described as “voluntary,” the Internal Revenue Service “strongly” encourages their use to reduce the tax burden on the employee. For this agreement to be valid, both parties must indicate the type of work to which the payments relate and sign and date the agreement. These forms and instructions for the payment you go (PAYG) voluntary agreements are often used by companies that employ contractors. Ministers can ensure that income tax (not social security contributions) is withheld from their compensation through voluntary withholding agreements with their employers. If the employer agrees to such an arrangement, the parish priest must provide a W-4 form to the church, and the church reserves itself on the basis of standard withholding schedules or a fixed amount on the basis of each salary period. The agreement between the officials and the Church must be written and (1) indicate the name, address and social security number of the parish priest, (2) the name and address of the church and (3) a declaration that the ministry officer wants the withholding of income tax. The contract can be terminated at any time by a written statement. Source: Clergy Financial Resources www.clergytaxnet.com Clergy Financial Resources is a national accounting and financial organization that has served churches and clergy since 1980. They have unprecedented tax expertise on the complex issues of the tax law of clerics, taxes, compensation for clergymen and the Church`s payroll. The financial resources of the clergy are a valuable resource for clergy, churches and denominations. A voluntary agreement does not change the recipient`s obligation to file an income tax return.
All income you earn, including income from voluntary agreements, must be included in your return.