Common use of Payment in Lieu Clause in Contracts

Payment in Lieu. The salary cap for the Social Security portion of FICA (6.2%) is $128,400 in 2018 while the Medicare portion (1.45%) on compensation up to $200,000 and 2.35% above $200,000. It is important that congregations NOT pay FICA directly for the minister to the IRS, but rather the in-lieu payment should be paid to the minister who must make quarterly self-employment taxes.

Payment in Lieu. The salary cap for the Social Security portion of FICA (6.2%) is $128,400 132,900 in 2018 2019 while the Medicare portion (1.45%) on compensation up to $200,000 and 2.35% above $200,000. It is important that congregations NOT pay FICA directly for the minister to the IRS, but rather the in-lieu payment should be paid to the minister who must make quarterly self-employment taxes.