| Procedure Name: | Claiming Exemption from Social Security Taxes |
|---|---|
| Scope: | All Staff |
| Revision Date: | July 7, 2021 |
| Last Review Date: | May 5, 2023 |
Minister's Tax Guide
Please follow the link to access the Minister's Tax Guide. https://www.fcmmbenefits.org/sites/default/files/2023-Ministers-TaxFinancialGuide.pdf
To claim the exemption from self-employment tax, the minister must:
- Be personally conscientiously opposed to receiving any public insurance (which includes insurance systems established by the Social Security Act, like Medicare, etc.) because of the minister's individual religious convictions and considerations (not because of general conscience), or because of the principles of the minister's religious denomination.
- File for other than economic reasons (e.g., because the minister feels they can invest the Social Security funds better themselves.)
- File Form 4361 with the IRS
- Inform the ordaining, commissioning, or licensing body of the church or order (or Reliant Mission) that he or she is opposed to the acceptance of public insurance for ministerial service.
- Establish that the religious organization that ordained, commissioned, or licensed the minister or his or her religious order is a tax-exempt religious organization
- Establish that the organization is a church or a convention or association of churches
- Sign and return the statement sent by the IRS/approved Form 4361 to verify that the requested exemption was based on the grounds listed on the statement
Deadline for filing an exemption
The application for exemption from self-employment tax must be filed by the date the tax return is due, including extensions, for the second year in which the minister had net ministerial income of $400 or more. These do not have to be consecutive tax years. A minister must include with Form 4361 a statement that he/she has informed the ordaining body of his /her church of his/her opposition to the coverage.
Other Types of Employment Income
When you exempt yourself from self-employment tax, you are not opting out of the Social Security system altogether. You are simply making the earnings you receive while in ministry as a minister/pastor exempt from self-employment tax. Any income you earn outside of your ministry role (other secular jobs etc.) is still subject to FICA (or SECA) taxes and must be paid.
If you do choose to exempt yourself from self-employment tax, please speak with a financial adviser to wisely prepare for your financial future.
“Chapter 6 - Retirement and Social Security.” Zondervan 2023 Minister's Tax & Financial Guide for 2022 Tax Returns, by Michael Martin et al., Zondervan, 2023, pp. 105–123.
