When I was hired as a new pastor last year, I decided to opt out of Social Security. Now that I’ve learned more about the pros and the cons of my decision, can I change it?
A minister’s earnings from performing ministerial duties are considered “net earnings from self-employment” under IRC Section 1402(a)(8). Due to this legal definition, ministers are considered self-employed for purposes of Social Security and Medicare—even if they are considered common law employees for all other employment tax purposes.
While a minister’s earnings are defined as self-employment income, ministers are given the ability to opt out of the system by filing a Form 4361.
To do so, the minister must conscientiously object or religiously oppose the acceptance (with respect to services performed by him or her as a minister, member, or practitioner) of any public insurance paid in the event of death, disability, old age, or retirement, or payments toward the cost of, or provided services for, medical care (including the benefits of any insurance systems established by the Social Security Act) [IRC Sec. 1402(e)(1)].
The due date for filing Form 4361 is the due date of the minister’s tax return (including extensions) for the second year after he or she received proper credentials by a church and has self-employment earnings of $400, any portion of which are for performing ministerial services.
Once a minister’s form is approved, it is good for life. It can only be ended if the IRS determines it was incorrectly filed or if Congress offers an opportunity for a minister to opt back into the system. Congressional opportunities are rarely granted, occurring only twice in the past 30 years.
One thing to note: Any earnings a minister logs from other forms of employment resulting in payments into Social Security can be drawn from in the future, provided the minister is considered fully insured.