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Six Things to Consider When Exempting a Minister from Self-Employment Tax

Here's what churches should know.

Six Things to Consider When Exempting a Minister from Self-Employment Tax

A minister's earnings from (directly from 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.

Although a minister's earnings are defined as self-employment income, ministers are given the ability to opt out of the system. To do this, they must file a Form 4361; Application for Exemption from Self Employment Tax for Use by Ministers, Members of Religious Orders, and Christian Science Practitioners.

1.Who Qualifies for Exemption?

This option is available to ministers, members of religious orders, and Christian Science Practitioners. We'll focus on its application to ministers. The minister must be a licensed, commissioned, ...

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Elaine L. Sommerville is licensed as a certified public accountant by the State of Texas. She has worked in public accounting since 1985.

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Posted:
  • September 19, 2013

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