Publication 517 (2012), Social Security and Other Information for Members of the Clergy and Religious Workers

What's New

SE tax rate. For 2012, the Old Age, Survivors, and Disability Insurance (OASDI) portion of the SE tax remains at 10.4%. The Medicare (HI) portion of the SE tax remains 2.9%. As a result, the SE tax rate remains at 13.3%. For more information, see the Instructions for Schedule SE (Form 1040).

Earnings subject to social security. For 2012, the maximum wages and self-employment income subject to social security tax increases from $106,800 to $110,100.

Modified AGI limit for traditional IRA contributions increased. For 2012, 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 $112,000 if married filing jointly or qualifying widow(er),
Less than $68,000 if single or head of household, or
Less than $10,000 if married filing separately.

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 $183,000.

Modified AGI limit for Roth IRA contributions increased. For 2012, you may be able to contribute to your Roth IRA if your modified AGI is:

Less than $183,000 if married filing jointly or qualifying widow(er),
Less than $125,000 if single, head of household, or married filing separately and did not live with your spouse at any time during the year, or
Less than $10,000 if married filing separately and you lived with your spouse at any time during the year.

Earned income credit (EIC). For 2012, 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 $45,060 ($50,270 for married filing jointly) and you have three or more qualifying children; $41,952 ($47,162 for married filing jointly) and you have two qualifying children; $36,920 ($42,130 for married filing jointly) and you have one qualifying child; and $13,980 ($19,190 for married filing jointly) and you do not have any qualifying children.

Reminders

Future developments. . For the latest information about developments related to Pub. 517, such as legislation enacted after it was published, go to www.irs.gov/pub517.

Photographs of missing children. 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.

Introduction

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.

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.

Comments and suggestions. We 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 and Specialty 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. 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.

Ordering forms and publications. Visit 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 61705-6613

Tax questions. If 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.

Useful 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

Ordering publications and forms. See How To Get Tax Help , near the end of this publication, for information about getting these publications and forms.

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Publication 517 - Introductory Material

What's New

Reminders

Introduction

Table 1. Are Your Ministerial Earnings* Covered Under FICA or SECA?

Note.

Note.

Useful Items - You may want to see: