Q: I have been a pastor for 15 years. In the beginning of my pastorate, I received some confusing information from the IRS about opting out of social security, so I never did.
I recently became ordained in the denomination that I have always served in. I also now understand the opt-out issue. Is there any way I can proceed with opting out now?
A: I directly address this issue in Chapter 9 of my annual Church & Clergy Tax Guide. Six requirements must be met in order for ministers to opt out of Social Security, including ministerial status, the nature of the religious organization–and the filing of a timely Form 4361. The filing of a timely Form 4361 requires, among other things, a conscientious opposition to the acceptance of public insurance based on religious principles. It also requires meeting a specific deadline:
The deadline for filing Form 4361 is the due date, including extensions, of the federal tax return for the second year in which a minister has net earnings from self-employment of $400 or more, any part of which derives from the performance of services in the exercise of ministry. In most cases, this means the form is due by April 15 of the third year of ministry. (Page 480,2014 Church & Clergy Tax Guide).
You can also learn more about this topic through these two articles by Editorial Advisor Elaine Sommerville on ChurchLawAndTax.com:
- "Six Things to Consider When Exempting a Minister from Self-Employment Tax"
- "The Two Most Confusing Aspects of Classifying Your Minister for Tax Purposes"
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