In my last post, I mentioned that our church was not aware of the fact that what it had seen previously regarding pastoral compensation didn't apply to us. You see, they thought that my pastoral income would be completely tax free, and yet, it wasn't. Why was that?
Well, as I said, when I became a pastor in September 2007, our church was a six-year-old church plant. For those first six years, the man who had pastored our church had been an older, experienced church planter, and sometime before he planted our church in 2001, he had already opted out of Social Security.
Now, in a future post, I'll take some time to talk about the many and varied issues surrounding a pastor's decision to opt out of paying Social Security taxes on his ministerial income, but for now, just know that doing so, generally speaking, makes a pastor's income completely tax free (free from both income tax and SECA).
In my case, however, since I was a brand-new pastor, I had not opted out of paying Social Security taxes. Therefore, while my income was effectively free from income tax, it was not free from SECA . . . but our church didn't understand that distinction nor how it worked.
They just thought that since the former pastor received his full income tax free each month, I would too. They weren't trying to lie to us or mislead us in any way. They just didn't know.