I have $2,650 income from my clergy. Why is there a $1,140 self employment tax?

It depends. If this was your total self employment income then the self employment tax would be much less. If you entered any housing allowance, this might be the difference. As a reminder, housing allowance is not subject to personal income tax, however it is subject to self employment tax.

The self employment net profit is first allowed to be reduced for 7.65% (1.0 - .0765 = .9235), this is then multiplied by the net profit to arrive at the amount subject to self employment tax ($500 x .9235= $462). The balance is taxed as follows:

• $462 x 12.4% for social security tax = $57.28
• $462 x 2.9% for medicare tax = $13.40

Please update here if you need additional assistance and we will help.