Self-Employment Tax on Clergy Income

If you report clergy income and your employer does not pay Social Security and Medicare tax, you must:

• pay these taxes yourself in the form of self-employment tax or
• be granted an exemption on Form 4361 or Form 4029.

Your housing allowance is not subject to regular income tax (to the extent that you use it for qualified housing expenses), but it is subject to Social Security and Medicare (self-employment) taxes.

Follow one of these links to learn more:

• How self-employment tax is calculated on clergy income
• Exemptions from self-employment tax for clergy income

TurboTax calculates your self-employment tax and prepares
Schedule SE: Self-Employment Tax based on:

• The amount of Social Security and Medicare tax withholding you enter from your Form W-2 on the "Enter Your Wage Information" screen
  
  
  
• and the selection you make on the "Clergy Self-Employment Tax" screen.
  
  

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Exemptions from Self-Employment Tax for Clergy Income

• Form 4361: Application for Exemption From Self-Employment Tax for Use by Minister, Members of Religious Orders, and Christian Science Practitioners
  
  You must file Form 4361 by the due date of your tax return for the second year that you have at least $400 of net earnings from self-employment. Part or all of the net earnings must be for clergy services. This includes Christian Science readers, practitioners, teachers, or lecturers. Employees of a church or church-controlled organization can claim the exemption if both the church and the employees file and receive the exemption. You can download Form 4361 from the IRS Website at http://www.irs.gov/pub/irs-pdf/f4361.pdf.
• Form 4029: Application for Exemption From Social Security and Medicare Taxes and Waiver of Benefits
  
  If you are a member of a recognized religious sect, you can request an exemption from paying self-employment tax for religious reasons. Your religious sect must be opposed to accepting public or private insurance benefit payments for death, disability, old age, retirement, or medical care. If you claim this exemption, you waive all rights for you or your heirs to ever receive any social security benefits. If you have already received social security payments, you cannot apply for the exemption unless you pay back all the benefits you received. You must file Form 4029 with the Social Security Administration and receive approval before you claim exemption with the IRS. Please see additional instructions on the IRS Website at http://www.irs.gov/pub/irs-pdf/f4029.pdf.

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