Is clergy income subject to self-employment tax?

Regardless of whether you’re a minister performing ministerial services as an employee or a self-employed person, all of your earnings, including wages, offerings, and fees you receive for performing marriages, baptisms, funerals, etc., are subject to income tax.

How is housing allowance taxed?

Is the housing allowance considered income and where do I report it? A minister’s housing allowance (sometimes called a parsonage allowance or a rental allowance) is excludable from gross income for income tax purposes but not for self-employment tax purposes. the amount actually used to provide or rent a home; or.

Yes. Members of the clergy (ministers, members of a religious order, and Christian Science practitioners and readers) and religious workers (church employees) must pay self-employment tax (SE tax). Any amount a church pays toward your income tax or SE tax, other than withholding the amount from your salary.

Who is automatically exempt from self-employment tax?

File Form 4361 to apply for an exemption from self-employment tax if you have ministerial earnings (defined later) and are: An ordained, commissioned, or licensed minister of a church; A member of a religious order who has not taken a vow of poverty; or • A Christian Science practitioner.

When to file Form 4361 exemption from self employment tax?

When to file. File Form 4361 by the due date, including extensions, of your tax return for the second tax year in which you had at least $400 of net earnings from self-employment, any of which came from ministerial services. Effective date of exemption.

What does ministerial service mean on form 4361?

Form 4361 (Rev. 1-2011) Page 2. Ministerial service, in general, is the service you perform in the exercise of your ministry, in the exercise of the duties required by your religious order, or in the exercise of your profession as a Christian Science pracitioner. Ministerial earnings are the self-employment earnings that result from such service.

Can a minister revoke a self employment exemption?

Once you claim the exemption, you cannot revoke the election. Although the income you earn is not subject to self-employment tax if the election is granted, you can use the income as the basis for contributions to a qualified retirement plan, such as a Keogh plan or individual 401 (k).

Can a minister exclude rental allowance from his income?

Ministers can exclude from their income a rental allowance or the fair rental value of a parsonage that is provided to them as pay for their services. This exemption applies only for income tax purposes.