taxmap/pubs/p517-000.htm#en_us_publink100033506taxmap/pubs/p517-000.htm#en_us_publink1000250591Earnings subject to social security.(p1)
For 2010, the maximum wages and self-employment income subject
to social security tax remains $106,800.
taxmap/pubs/p517-000.htm#en_us_publink1000256321Deduction for self-employed health insurance.(p1)
For 2010, you may be able to reduce your net self-employment
income by the amount of your self-employed health insurance deduction on line 29
of Form 1040. See the instructions for Schedule SE (Form 1040), line 3.
taxmap/pubs/p517-000.htm#en_us_publink100033510Modified AGI limit for traditional IRA contributions increased.(p1)
For 2010, you may be able to take an IRA deduction if you were
covered by a retirement plan at work and your modified AGI is:
- Less than $109,000 if married filing jointly or qualifying
widow(er), or
- Less than $66,000 if single or head of household.
If you file a joint return and either you or your spouse was
not covered by a retirement plan at work, you may be able to take an IRA
deduction if your modified AGI is less than $177,000.
Modified AGI limit for Roth IRA contributions increased.(p1)
For 2010, you may be able to contribute to your Roth IRA if your
modified AGI is:
- Less than $177,000 if married filing jointly or qualifying
widow(er), or
- Less than $120,000 if single, head of household, or married
filing separately and did not live with your spouse at any time during the year.
Earned income credit (EIC).(p1)
For 2010, the maximum amount of income you can earn and still
claim the EIC has increased. You may be able to take the EIC if you earned less
than $43,352 ($48,362 for married filing jointly) and you have three or more
qualifying children; $40,363 ($45,373 for married filing jointly) and you have
two qualifying children; $35,535 ($40,545 for married filing jointly) and you
have one qualifying child; and $13,460 ($18,470 for married filing jointly) and
you do not have any qualifying children.
taxmap/pubs/p517-000.htm#en_us_publink100033513Photographs of missing children.(p2)
The Internal Revenue Service is a proud partner with the National
Center for Missing and Exploited Children. Photographs of missing children
selected by the Center may appear in this publication on pages that would
otherwise be blank. You can help bring these children home by looking at the
photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a
child.
Three federal taxes are paid on wages and self-employment income—income
tax, social security tax, and Medicare tax. Social security and Medicare taxes
are collected under one of two systems. Under the Self-Employment Contributions
Act (SECA), the self-employed person pays all the taxes. Under the Federal
Insurance Contributions Act (FICA), the employee and the employer each pay half
of the taxes. No earnings are subject to both systems.
taxmap/pubs/p517-000.htm#id2010_f15021x01
Table 1. Are Your Ministerial Earnings* Covered Under
FICA or SECA?
Find the class to which you belong in the left column and read
across the table to find if you are covered under FICA or SECA. Do not rely on
this table alone. Also read the discussion for the class in the following pages.
| Class | Covered under FICA? | Covered under SECA? |
|---|
| Minister
| NO. Your ministerial earnings are exempt. | YES, if you do not have an approved exemption from the IRS.
NO, if you have an approved exemption.
|
| Member of a religious order who has not taken a vow of poverty
| NO. Your ministerial earnings are exempt. | YES, if you do not have an approved exemption from the IRS.
NO, if you have an approved exemption.
|
| Member of a religious order who has taken a vow of poverty
| YES, if:
- Your order elected FICA coverage for its members, or
- You worked outside the order and the work was not required
by, or done on behalf of, the order.
NO, if neither of the above applies.
| NO. Your ministerial earnings are exempt. |
| Christian Science practitioner or reader
| NO. Your ministerial earnings are exempt. | YES, if you do not have an approved exemption from the IRS.
NO, if you have an approved exemption.
|
| Religious worker (church employee)
| YES, if your employer did not elect to exclude you.
NO, if your employer elected to exclude you.
| YES, if your employer elected to exclude you from FICA.
NO, if you are covered under FICA.
|
| Member of a recognized religious sect
| YES, if you are an employee and do not have an approved
exemption from the IRS.
NO, if you have an approved exemption.
| YES, if you are self-employed and do not have an approved
exemption from the IRS.
NO, if you have an approved exemption.
|
| * Ministerial earnings are the self-employment earnings
that result from
ministerial services, defined and discussed later.
|
This publication contains information for the following classes
of taxpayers.
- Ministers.
- Members of a religious order.
- Christian Science practitioners and readers.
- Religious workers (church employees).
- Members of a recognized religious sect.
Note.Unless otherwise noted, in this publication references to members
of the clergy include ministers, members of a religious order (but not members
of a recognized religious sect), and Christian Science practitioners and
readers.
This publication covers the following topics about the collection
of social security and Medicare taxes from members of the clergy, religious
workers, and members of a recognized religious sect.
- Which earnings are taxed under FICA and which under SECA.
See
Table 1.
- How a member of the clergy or a member of a recognized religious
sect can apply for an exemption from self-employment tax.
- How a member of the clergy or religious worker figures net
earnings from self-employment.
This publication also covers certain income tax rules of interest
to ministers and members of a religious order.
A
Comprehensive Example
shows filled-in forms for a minister who has income taxed under SECA, other
income taxed under FICA, and income tax reporting of items specific to a
minister.
 | In the back of Publication 517 is a set of
worksheets
that you can use to figure the amount of your taxable ministerial income and
allowable deductions. You will find these worksheets right after the
Comprehensive Example. |
Note.In this publication, the term "church" is generally used in
its generic sense and not in reference to any particular religion.
taxmap/pubs/p517-000.htm#en_us_publink100081112We welcome your comments about this publication and your suggestions
for future editions.
You can write to us at the following address:
Internal Revenue Service
Individual Forms and Publications Branch
SE:W:CAR:MP:T:I
1111 Constitution Ave. NW, IR-6526
Washington, DC 20224
We respond to many letters by telephone. Therefore, it would
be helpful if you would include your daytime phone number, including the area
code, in your correspondence.
You can email us at
*taxforms@irs.gov. (The asterisk must be included in the address.) Please put
"Publications Comment" on the subject line. You can also send us comments from
www.irs.gov/formspubs, select "Comment on Tax Forms and Publications" under "Information
about."
Although we cannot respond individually to each comment received,
we do appreciate your feedback and will consider your comments as we revise our
tax products.
taxmap/pubs/p517-000.htm#en_us_publink100081113Visit
www.irs.gov/formspubs
to download forms and publications, call 1-800-829-3676, or write to the address
below and receive a response within 10 days after your request is received.
Internal Revenue Service
1201 N. Mitsubishi Motorway
Bloomington, IL 61705-6613If you have a tax question, check the information available on
IRS.gov or call 1-800-829-1040. We cannot answer tax questions sent to either of
the above addresses.
taxmap/pubs/p517-000.htm#TXMP1551a8aaUseful items
You may want to see:
Publication 54 Tax Guide for U.S. Citizens and Resident Aliens Abroad 525 Taxable and Nontaxable Income 529 Miscellaneous Deductions 535 Business Expenses 590 Individual Retirement Arrangements (IRAs) 596 Earned Income Credit (EIC) Form (and Instructions) SS-8:
Determination of Worker Status for Purposes of Federal Employment
Taxes and Income Tax Withholding SS-16:
Certificate of Election of Coverage Under the Federal Insurance
Contributions Act Schedule C (Form 1040):
Profit or Loss From Business (Sole Proprietorship) Schedule C-EZ (Form 1040):
Net Profit From Business (Sole Proprietorship) Schedule SE (Form 1040):
Self-Employment Tax 1040-ES:
Estimated Tax for Individuals 1040X:
Amended U.S. Individual Income Tax Return 4029:
Application for Exemption From Social Security and Medicare
Taxes and Waiver of Benefits 4361:
Application for Exemption From Self-Employment Tax for Use by
Ministers, Members of Religious Orders and Christian Science Practitioners 8274:
Certification by Churches and Qualified Church-Controlled Organizations
Electing Exemption From Employer Social Security and Medicare Taxes taxmap/pubs/p517-000.htm#en_us_publink100033519See
How To Get Tax Help, near the end of this publication, for information about getting
these publications and forms.
This section gives information about which system (SECA or FICA)
is used to collect social security and Medicare taxes from members of the clergy
(ministers, members of a religious order, and Christian Science practitioners
and readers) and religious workers (church employees).
taxmap/pubs/p517-000.htm#en_us_publink1000255884The services you perform in the exercise of your ministry, of
the duties required by your religious order, or of your profession as a
Christian Science practitioner or reader are covered by social security and
Medicare under SECA. Your earnings for these
ministerial services
(defined later) are subject to self-employment (SE) tax unless one of the
following applies.
- You are a member of a religious order who has taken a vow
of poverty.
- You ask the Internal Revenue Service (IRS) for an exemption
from SE tax for your services and the IRS approves your request. See
Exemption From Self-Employment (SE) Tax, later.
- You are subject only to the social security laws of a foreign
country under the provisions of a social security agreement between the United
States and that country. For more information, see
Bilateral Social Security (Totalization) Agreements in Publication 54.
Your earnings that are not from ministerial services may be subject
to social security tax under FICA or SECA according to the rules that apply to
taxpayers in general. See
Ministerial Services, later.
If you are a minister of a church, your earnings for the services
you perform in your capacity as a minister are subject to SE tax, even if you
perform these services as an employee of that church. However, you can request
that the IRS grant you an exemption, as discussed under
Exemption From Self-Employment (SE) Tax, later. For the specific services covered, see
Ministerial Services, later.
Ministers are individuals who are duly ordained, commissioned,
or licensed by a religious body constituting a church or church denomination.
They are given the authority to conduct religious worship, perform sacerdotal
functions, and administer ordinances or sacraments according to the prescribed
tenets and practices of that church or denomination.
If a church or denomination ordains some ministers and licenses
or commissions others, anyone licensed or commissioned must be able to perform
substantially all the religious functions of an ordained minister to be treated
as a minister for social security purposes.
taxmap/pubs/p517-000.htm#en_us_publink1000255887Even though, for social security tax purposes, you are considered
a self-employed individual in performing ministerial services, you may be
considered an employee for income tax or retirement plan purposes in performing
those same ministerial services. For income tax or retirement plan purposes,
some of your income may be considered self-employment income and other income
may be considered wages.
Unless you are exempt from SECA, you will pay SE tax on both
your wages and your self-employment income.
taxmap/pubs/p517-000.htm#en_us_publink1000255888Under common-law rules, you are considered either an employee
or a self-employed person. Generally, you are an employee if you perform
services for someone who has the legal right to control both what you do and how
you do it, even if you have considerable discretion and freedom of action. For
more information about the common-law rules, see Publication 15-A, Employer's
Supplemental Tax Guide.
If you are employed by a congregation for a salary, you are generally
a common-law employee and income from the exercise of your ministry is
considered wages for income tax purposes. However, amounts received directly
from members of the congregation, such as fees for performing marriages,
baptisms, or other personal services, are not considered wages; such amounts are
self-employment income for both income tax purposes and social security tax
purposes.
taxmap/pubs/p517-000.htm#en_us_publink100033525A church hires and pays you a salary to perform ministerial services
subject to its control. Under the common-law rules, you are an employee of the
church while performing those services.
taxmap/pubs/p517-000.htm#en_us_publink1000255889If you are not certain whether you are an employee or a self-employed
person, you can get a determination from the IRS by filing Form SS-8.
taxmap/pubs/p517-000.htm#en_us_publink1000255890If you are a member of a religious order who has not taken a
vow of poverty, your earnings for ministerial services you perform as a member
of the order are subject to SE tax. See
Ministerial Services, later. However, you can request that the IRS grant you an
exemption as discussed under
Exemption From Self-Employment (SE) Tax, later.
If you are a member of a religious order and have taken a vow
of poverty, you are already exempt from paying SE tax on your earnings for
ministerial services you perform as an agent of your church or its agencies. You
do not need to request a separate exemption. For income tax purposes, the
earnings are tax free to you. Your earnings are considered the income of the
religious order.
taxmap/pubs/p517-000.htm#en_us_publink100033529However, even if you have taken a vow of poverty, the services
you perform for your church or its agencies may be covered under social
security. Your services are covered if your order, or an autonomous subdivision
of the order, elects social security coverage for its current and future
vow-of-poverty members.
The order or subdivision elects coverage by filing Form SS-16.
It can elect coverage for certain vow-of-poverty members for a retroactive
period of up to 20 calendar quarters before the quarter in which it files the
certificate. If the election is made, the order or subdivision pays both the
employer's and employee's share of the tax. You do not pay any of the FICA tax.
taxmap/pubs/p517-000.htm#en_us_publink100033530Even if you are a member of a religious order who has taken a
vow of poverty and are required to turn over to the order amounts you earn, your
earnings are subject to federal income tax withholding and employment (FICA) tax
if you:
- Work for an organization outside your religious community,
and
- Perform work that is not required by, or done on behalf of,
the order.
In this case, you are considered an employee of that outside
organization. You may, however, be able to take a charitable deduction for the
amount you turn over to the order. See Publication 526, Charitable
Contributions.
taxmap/pubs/p517-000.htm#en_us_publink100033531taxmap/pubs/p517-000.htm#en_us_publink100033532Organizations and individuals may request rulings from the IRS
on whether they are religious orders, or members of a religious order,
respectively, for FICA tax, SE tax, and federal income tax withholding purposes.
To request a ruling, follow the procedures in Revenue Procedure 2010-1, 2010-1
I.R.B. 1, available at
www.irs.gov/irb/2010-01_IRB/ar06.html.
Generally, your earnings from services you perform in your profession
as a Christian Science practitioner or reader are subject to SE tax. However,
you can request an exemption as discussed under
Exemption From Self-Employment (SE) Tax, later.
Christian Science practitioners are members in good standing
of the Mother Church, The First Church of Christ, Scientist, in Boston,
Massachusetts, who practice healing according to the teachings of Christian
Science. Christian Science practitioners are specifically exempted from
licensing by state laws.
Some Christian Science practitioners also are Christian Science
teachers or lecturers. Income from teaching or lecturing is considered the same
as income from their work as practitioners.
taxmap/pubs/p517-000.htm#en_us_publink100033535For tax purposes, Christian Science readers are considered the
same as ordained, commissioned, or licensed ministers.
taxmap/pubs/p517-000.htm#en_us_publink100033536If you are a religious worker (a church employee) and are not
in one of the classes already discussed, your wages are generally subject to
social security and Medicare tax under FICA, not SECA. Some exceptions are
discussed next.
taxmap/pubs/p517-000.htm#en_us_publink100033537Churches and qualified church-controlled organizations (church
organizations) that are opposed for religious reasons to the payment of social
security and Medicare taxes can elect to exclude their employees from FICA
coverage. If your employer makes this election, it does not pay the employer's
portion of the FICA taxes or withhold from your pay your portion of the FICA
taxes. Instead, your wages are subject to SECA and you must pay SE tax on your
wages if they exceed $108.28 during the tax year. However, you can request an
exemption from SE tax if you are a member of a recognized religious sect, as
discussed below.
Churches and church organizations make this election by filing
two copies of Form 8274. For more information about making this election, see
Form 8274.
taxmap/pubs/p517-000.htm#en_us_publink100033538You may be able to choose to be exempt from social security and
Medicare taxes, including the SE tax, if you are a member of a recognized
religious sect or division and work for a church (or church-controlled nonprofit
division) that does not pay the employer's part of the social security tax on
wages. This exemption does not apply to your service, if any, as a minister of a
church or as a member of a religious order.
taxmap/pubs/p517-000.htm#en_us_publink100033539To be covered under the SE tax provisions (SECA), individuals
generally must be citizens or resident aliens of the United States. Nonresident
aliens are not covered under SECA unless a social security agreement in effect
between the United States and the foreign country determines that you are
covered under the U.S. social security system.
To determine your alien status, see Publication 519, U.S. Tax
Guide for Aliens.
taxmap/pubs/p517-000.htm#en_us_publink100033540If you are a resident of one of these U.S. possessions but not
a U.S. citizen, for SE tax purposes you are treated the same as a citizen or
resident alien of the United States. For information on figuring the tax, see
Self-Employment Tax: Figuring Net Earnings, later.
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