MINISTER AND MISSIONARY TAXES
EXEMPTION FROM SE TAX BY MINISTERS
If you are a minister, your earnings for the services you perform in your capacity as a minister are subject to self-employment (SE) tax unless one of the following applies:
You are a member of a religious order who has taken a vow of poverty.
You ask the IRS for an exemption from SE tax for your services and the IRS approves your request.
You are subject only to the social security laws of a foreign country under the provisions of a social security agreement between the United States and that country.
Ministers are individuals who are duly ordained, commissioned or licensed by a religious body constituting a church or church denomination. They are given the authority to conduct religious worship, perform sacerdotal functions and administer ordinances or sacraments according to the prescribed tenets and practices of that church or denomination.
If a church or denomination ordains some ministers and licenses or commissions others, anyone licensed or commissioned must be able to perform substantially all the religious functions of an ordained minister to be treated as a minister for social security purposes.
To claim exemption from SE tax, you must meet all of the following conditions:
You file Form 4361.
You are conscientiously opposed to public insurance because of your individual religious considerations or you are opposed because of the principles of your religious denomination.
You file for other than economic reasons.
You inform the ordaining body of your church that you are opposed to public insurance.
You establish that the organization that ordained you is a tax-exempt religious organization organized as a church.
You must file Form 4361 by the date your income tax is due , including extensions, for the second tax year in which you have net earnings from self-employment of at least $400. The two years do not have to be consecutive tax years.
The IRS will return to you a copy of the Form 4361 that you filed indicating whether your exemption has been approved. If it is approved, keep the approved copy in your permanent records.