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The approval process can take some

Members of Recognized

year beginning before you meet the eligibility

TIP

time, so you should file Form 4361 as

requirements discussed earlier.

Religious Sects

soon as possible.

The exemption will end if you fail to meet the

eligibility requirements or if the Commissioner of

If you are a member of a recognized religious

Social Security determines that the sect or divi-

sect, or a division of a recognized religious sect,

Example 1. Rev. Lawrence Jaeger, a cler-

sion fails to meet them. You must notify the IRS

you can apply for an exemption from payment of

gyman ordained in 2003, has net earnings of

within 60 days if you are no longer a member of

$450 in 2003 and $500 in 2004. He must file his

social security and Medicare taxes.

the religious group, or if you no longer follow the

application for exemption by the due date, in-

established teachings of this group. The exemp-

Exception. If you received social security

cluding extensions, for his 2004 income tax re-

tion will end on the date you notify the IRS.

benefits or payments, or anyone else received

turn. However, if Rev. Jaeger does not receive

these benefits or payments based on your

IRS approval for an exemption by April 15, 2005,

Refunds of SE tax paid. To get a refund of

wages or SE income, you cannot apply. How-

his SE tax for 2004 is due by that date.

any SE tax you paid while the exemption was in

ever, if you pay your benefits back, you may be

effect, file Form 1040X. For information on filing

considered for exemption. Contact your local

Example 2. Rev. Louise Wolfe has $300 in

this form, see Refunds of SE tax under Minis-

Social Security office to find out the amount to

net earnings as a minister in 2003, but earned

ters, Members of Religious Orders, and Chris-

be paid back.

more than $400 in both 2002 and 2004. She

tian Science Practitioners, earlier.

must file her application for exemption by the

Eligibility requirements. To claim this ex-

due date, including extensions, for her 2004

emption from SE tax, all the following require-

income tax return. However, if she does not

Exemption From FICA Taxes

ments must be met.

receive IRS approval for an exemption by April

15, 2005, her SE tax for 2004 is due by that date.

Generally, under FICA, the employer and the

1) You must file Form 4029, discussed later

employee each pay half of the social security

under Requesting exemption — Form

Example 3. In 2001, Rev. David Moss was

and Medicare tax. Both the employee and the

4029.

ordained a minister and had $700 in net earn-

employer, if they meet the eligibility require-

ings as a minister. In 2002, he received $1,000

2) As a follower of the established teachings

ments discussed earlier, can apply to be exempt

as a minister, but his related expenses were

of the sect or division, you must be consci-

from their share of FICA taxes on wages paid by

over $1,000. Therefore, he had no net earnings

entiously opposed to accepting benefits of

the employer to the employee.

as a minister in 2002. Also in 2002, he opened a

any private or public insurance that makes

A partnership in which each partner holds a

book store and had $8,000 in net self-employ-

payments for death, disability, old age, re-

religious exemption from social security and

ment earnings from the store. In 2003, he had

tirement, or medical care, or provides serv-

Medicare is an employer for this purpose.

net earnings of $1,500 as a minister and

ices for medical care.

If the employer’s application is ap-

$10,000 net SE earnings from the store.

3) You must waive all rights to receive any

TIP

proved, the exemption will apply only to

Rev. Moss had net earnings from self-em-

social security payment or benefit and

FICA taxes on wages paid to employ-

ployment in 2001 and 2003 that were $400 or

agree that no benefits or payments will be

ees who also received an approval of identical

more each year, and part of the earnings in each

made to anyone else based on your

applications.

of those years was for his services as a minister,

wages and SE income.

so he must file his application for exemption by

the due date, including extensions, for his 2003

Information for employers. If you have an

4) The Commissioner of Social Security must

income tax return.

approved Form 4029 and you have an em-

determine that:

ployee who has an approved Form 4029, do not

Death of individual. The right to file an ap-

a) Your sect or division has the estab-

report wages you paid to the employee as social

plication for exemption ends with an individual’s

lished teachings as in (2) above,

security and Medicare wages.

death. A surviving spouse, executor, or adminis-

If you have an employee who does not have

trator cannot file an exemption application for a

b) It is the practice, and has been for a

an approved Form 4029, you must withhold the

deceased clergy member.

substantial period of time, for members

employee’s share of social security and Medi-

of the sect or division to provide for

Effective date of exemption. An approved

care taxes and pay the employer’s share.

their dependent members in a manner

exemption is effective for all tax years after 1967

that is reasonable in view of the mem-

Form W – 2. When preparing a Form W – 2

in which you have $400 or more of net earnings

bers’ general level of living, and

for an employee with an approved Form 4029,

from self-employment and any part of the earn-

write “Form 4029” in the box marked Other. Do

c) The sect or division has existed at all

ings is for services as a member of the clergy.

not make any entries in box 3, 4, 5, or 6.

times since December 31, 1950.

Once the exemption is approved, it is irrevoca-

ble.

Forms 941 and 943. Do not include these

If you have previously received approval for

exempt wages on Form 941, Employer’s Quar-

Example. Rev. Trudy Austin, ordained in

exemption from SE tax, you are considered to

terly Federal Tax Return, or on Form 943,

have met the requirements and do not need to

2002, had $400 or more in net earnings as a

Employer’s Annual Federal Tax Return for Agri-

apply for this exemption.

minister in both 2002 and 2003. She files an

cultural Employees, if you have received an ap-

application for exemption on February 18, 2004.

proved Form 4029.

Requesting exemption — Form 4029. To

If an exemption is granted, it is effective for 2002

On Form 941, write “Form 4029” to the left of

request the exemption, file Form 4029 in tripli-

and the following years.

the entry spaces on the lines for Taxable social

cate with the Social Security Administration at

security wages, Taxable social security tips, and

Refunds of SE tax. If, after receiving an ap-

the address shown on the form. The sect or

Taxable Medicare wages and tips. Check the

proved Form 4361, you find that you overpaid

division must complete part of the form.

box on line 8 to show that the wages are not

SE tax, you can file a claim for refund on Form

subject to these taxes.

The IRS will return to you a copy of the

1040X before the period of limitations ends. This

On Form 943, write “Form 4029” to the left of

Form 4029 that you filed indicating

is generally within 3 years from the date you filed

the entry spaces on the lines for Total wages

whether your exemption has been ap-

RECORDS

the return or within 2 years from the date you

subject to social security tax, and Total wages

proved. If it is approved, keep the approved copy

paid the tax, whichever is later. A return you

subject to Medicare tax.

in your permanent records.

filed, or tax you paid, before the due date is

considered to have been filed or paid on the due

Effective date. An approved exemption

When to file. You can file Form 4029 at any

date.

from FICA becomes effective on the first day of

time.

If you file a claim after the 3-year period but

the first calendar quarter after the quarter in

within 2 years from the time you paid the tax, the

Effective date of exemption. An approved

which Form 4029 is filed. The exemption will end

credit or refund will not be more than the tax you

exemption generally is effective on the first day

on the last day of the calendar quarter before the

paid within the 2 years immediately before you

of the first quarter after the quarter in which

quarter in which the employer, employee, sect,

file the claim.

Form 4029 is filed. It does not apply to any tax

or division fails to meet the requirements.

Page 5

Publication 517 - Social Security And Other Information For Members Of The Clergy And Religious Workers - 2003 Page 5

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