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member). This requirement does not ap-

net earnings of $1,500 as a minister and

tirement, or medical care, or provides serv-

ply to Christian Science practitioners.

$10,000 net SE earnings from the store.

ices for medical care.

Rev. Moss had net earnings from self-em-

•

You establish that the organization that or-

3) You must waive all rights to receive any

ployment in 2000 and 2002 that were $400 or

dained, commissioned, or licensed you, or

social security payment or benefit and

more each year, and part of the earnings in each

your religious order, is a tax-exempt relig-

agree that no benefits or payments will be

of those years was for his services as a minister,

ious organization.

made to anyone else based on your

so he must file his application for exemption by

wages and SE income.

•

You establish that the organization is a

the due date, including extensions, for his 2002

church or a convention or association of

4) The Commissioner of Social Security must

income tax return.

churches.

determine that:

Death of individual. The right to file an ap-

•

You did not make an election discussed

plication for exemption ends with an individual’s

a) Your sect or division has the estab-

earlier under Who cannot be exempt?

death. A surviving spouse, executor, or adminis-

lished teachings as in (2) above,

trator cannot file an exemption application for a

•

You sign and return the statement the IRS

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

deceased clergy member.

mails to you to certify that you are request-

substantial period of time, for members

ing an exemption based on the grounds

of the sect or division to provide for

Effective date of exemption. An approved

listed on the statement.

their dependent members in a manner

exemption is effective for all tax years after 1967

that is reasonable in view of the mem-

in which you have $400 or more of net earnings

bers’ general level of living, and

from self-employment and any part of the earn-

Requesting exemption — Form 4361. To

ings is for services as a member of the clergy.

request exemption from SE tax, file Form 4361

c) The sect or division has existed at all

Once the exemption is approved, it is irrevoca-

in triplicate (original and two copies) with the

times since December 31, 1950.

ble.

IRS.

If you have previously received approval for

The IRS will return to you a copy of the

Example. Rev. Trudy Austin, ordained in

exemption from SE tax, you are considered to

Form 4361 that you filed indicating

2001, had $400 or more in net earnings as a

have met the requirements and do not need to

whether your exemption has been ap-

RECORDS

minister in both 2001 and 2002. She files an

apply for this exemption.

proved. If it is approved, keep the approved copy

application for exemption on February 18, 2003.

in your permanent records.

If an exemption is granted, it is effective for 2001

Requesting exemption — Form 4029. To

and the following years.

When to file. File Form 4361 by the date

request the exemption, file Form 4029 in tripli-

your income tax return is due, including exten-

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

cate with the Social Security Administration at

sions, for the second tax year in which you have

proved Form 4361, you find that you overpaid

the address shown on the form. The sect or

net earnings from self-employment of at least

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

division must complete part of the form.

$400. This rule applies if any part of your net

1040X before the period of limitations ends. This

The IRS will return to you a copy of the

earnings for each of the two years came from

is generally within 3 years from the date you filed

Form 4029 that you filed indicating

your services as a:

the return or within 2 years from the date you

whether your exemption has been ap-

RECORDS

paid the tax, whichever is later. A return you

proved. If it is approved, keep the approved copy

•

Minister,

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

in your permanent records.

considered to have been filed or paid on the due

•

Member of a religious order, or

date.

When to file. You can file Form 4029 at any

•

Christian Science practitioner.

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

time.

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

The two years do not have to be consecutive tax

credit or refund will not be more than the tax you

Effective date of exemption. An approved

years.

paid within the 2 years immediately before you

exemption generally is effective on the first day

file the claim.

of the first quarter after the quarter in which

The approval process can take some

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

TIP

time, so you should file Form 4361 as

Members of Recognized

year beginning before you meet the eligibility

soon as possible.

requirements discussed earlier.

Religious Sects

The exemption will end if you fail to meet the

eligibility requirements or if the Commissioner of

Example 1. Rev. Lawrence Jaeger, a cler-

If you are a member of a recognized religious

Social Security determines that the sect or divi-

gyman ordained in 2002, has net earnings of

sect, or a division of a recognized religious sect,

sion fails to meet them. You must notify the IRS

$450 in 2002 and $500 in 2003. He must file his

you can apply for an exemption from payment of

within 60 days if you are no longer a member of

application for exemption by the due date, in-

social security and Medicare taxes.

the religious group, or if you no longer follow the

cluding extensions, for his 2003 income tax re-

established teachings of this group. The exemp-

Exception. If you received social security

turn. However, if Rev. Jaeger does not receive

tion will end on the date you notify the IRS.

benefits or payments, or anyone else received

IRS approval for an exemption by April 15, 2004,

these benefits or payments based on your

his SE tax for 2003 is due by that date.

wages or SE income, you cannot apply. How-

Refunds of SE tax paid. For information on

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

Example 2. Rev. Louise Wolfe has $300 in

requesting refunds, see Ministers, Members of

considered for exemption. Contact your local

net earnings as a minister in 2002, but earned

Religious Orders, and Christian Science Practi-

Social Security office to find out the amount to

more than $400 in both 2001 and 2003. She

tioners, earlier.

be paid back.

must file her application for exemption by the

due date, including extensions, for her 2003

Eligibility requirements. To claim this ex-

income tax return. However, if she does not

Exemption From FICA Taxes

emption from SE tax, all the following require-

receive IRS approval for an exemption by April

ments must be met.

Generally, under FICA, the employer and the

15, 2004, her SE tax for 2003 is due by that date.

employee each pay half of the social security

1) You must file Form 4029, discussed later

Example 3. In 2000, Rev. David Moss was

and Medicare tax. Both the employee and the

under Requesting exemption — Form

ordained a minister and had $700 in net earn-

employer, if they meet the eligibility require-

4029.

ings as a minister. In 2001, he received $1,000

ments discussed earlier, can apply to be exempt

as a minister, but his related expenses were

2) As a follower of the established teachings

from their share of FICA taxes on wages paid by

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

of the sect or division, you must be consci-

the employer to the employee.

as a minister in 2001. Also in 2001, he opened a

entiously opposed to accepting benefits of

A partnership in which each partner holds a

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

any private or public insurance that makes

religious exemption from social security and

ment earnings from the store. In 2002, he had

payments for death, disability, old age, re-

Medicare is an employer for this purpose.

Page 5

Publication 517 - Social Security And Other Information For Members Of The Clergy And Religious Workers - 2002 Page 5

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