Publication 517 - Main Content


Social Security Coverage

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).

Coverage of Members of the Clergy

The 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.

Ministers

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 defined.   Ministers are individuals who are duly ordained, commissioned, or licensed by a religious body constituting a church or church denomination. Ministers have 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.

Employment status for other tax purposes.   Even though all of your income from performing ministerial services is subject to self-employment tax for social security tax purposes, you may be an employee for income tax or retirement plan purposes in performing those same services. For income tax or retirement plan purposes, your income earned as an employee will be considered wages.

Common-law employee.   Under 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 a congregation employs you and pays you a salary, you are generally a common-law employee and income from the exercise of your ministry is 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 wages; such amounts are self-employment income for both income tax purposes and social security tax purposes.

Example.

A 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.

Form SS-8.   If 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.

Members of Religious Orders

If 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.

Vow of poverty.   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.

Services covered under FICA at the election of the order.   However, 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. The election may cover 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.

Services performed outside the order.   Even if you are a member of a religious order who has taken a vow of poverty and the order requires you to turn over amounts you earn, your earnings are subject to federal income tax and either SE tax or FICA tax (including estimated tax payments and/or withholding) if you:
  • Are self-employed or an employee of an organization outside your religious community, and

  • Perform work not required by, or done on behalf of, the order.

  In these cases, your income from self-employment or as an employee of that outside organization is taxable to you directly. You may, however, be able to take a charitable deduction for the amount you turn over to the order. See Publication 526, Charitable Contributions.

Rulings.   Organizations 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 2014-1, 2014-1 I.R.B. 1, available at www.irs.gov/irb/2014-1_IRB/ar05.html.

Christian Science Practitioners and Readers

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.

Practitioners.   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. State law specifically exempts Christian Science practitioners from licensing requirements.

  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.

Readers.   For tax purposes, Christian Science readers are considered the same as ordained, commissioned, or licensed ministers.

Coverage of Religious Workers (Church Employees)

If 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.

Election by Church To Exclude Its Employees From FICA Coverage

Churches 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.

Election by Certain Church Employees Who Are Opposed to Social Security and Medicare

You 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.

Make this choice by filing Form 4029. See Requesting Exemption—Form 4029 , later, under Members of Recognized Religious Sects.

U.S. Citizens and Resident and Nonresident Aliens

To 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.

Residents of Puerto Rico, the U.S. Virgin Islands, Guam, the CNMI, and American Samoa.   If 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.

Ministerial Services

Ministerial services, in general, are the services you perform in the exercise of your ministry, in the exercise of your duties as required by your religious order, or in the exercise of your profession as a Christian Science practitioner or reader. Income you receive for performing ministerial services is subject to SE tax unless you have an exemption as explained later. Even if you have an exemption, only the income you receive for performing ministerial services is exempt. The exemption does not apply to any other income.

The following discussions provide more detailed information on ministerial services of ministers, members of a religious order, and Christian Science practitioners and readers.

Ministers

Most services you perform as a minister, priest, rabbi, etc., are ministerial services. These services include:

  • Performing sacerdotal functions,

  • Conducting religious worship, and

  • Controlling, conducting, and maintaining religious organizations (including the religious boards, societies, and other integral agencies of such organizations) that are under the authority of a religious body that is a church or denomination.

You are considered to control, conduct, and maintain a religious organization if you direct, manage, or promote the organization's activities.

A religious organization is under the authority of a religious body that is a church or denomination if it is organized for and dedicated to carrying out the principles of a faith according to the requirements governing the creation of institutions of the faith.

Services for nonreligious organizations.   Your services for a nonreligious organization are ministerial services if the services are assigned or designated by your church. Assigned or designated services qualify even if they do not involve performing sacerdotal functions or conducting religious worship.

  If your services are not assigned or designated by your church, they are ministerial services only if they involve performing sacerdotal functions or conducting religious worship.

Services that are not part of your ministry.   Income from services you perform as an employee that are not ministerial services is subject to social security and Medicare tax withholding under FICA (not SECA) under the rules that apply to employees in general. The following are not ministerial services.
  • Services you perform for nonreligious organizations other than the services stated above.

  • Services you perform as a duly ordained, commissioned, or licensed minister of a church as an employee of the United States, the District of Columbia, a foreign government, or any of their political subdivisions. These services are not ministerial services even if you are performing sacerdotal functions or conducting religious worship. (For example, if you perform services as a chaplain in the Armed Forces of the United States, those services are not ministerial services.)

  • Services you perform in a government-owned and operated hospital. (These services are considered performed by a government employee, not by a minister as part of the ministry.) However, services that you perform at a church-related hospital or health and welfare institution, or a private nonprofit hospital, are considered to be part of the ministry and are considered ministerial services.

Books or articles.   Writing religious books or articles is considered to be in the exercise of your ministry and is considered a ministerial service.

  This rule also applies to members of religious orders and to Christian Science practitioners and readers.

Members of Religious Orders

Services you perform as a member of a religious order in the exercise of duties required by the order are ministerial services. The services are considered ministerial because you perform them as an agent of the order.

For example, if the order directs you to perform services for another agency of the supervising church or an associated institution, you are considered to perform the services as an agent of the order.

However, if the order directs you to work outside the order, this employment will not be considered a duty required by the order unless:

  • Your services are the kind that are ordinarily performed by members of the order, and

  • Your services are part of the duties that must be exercised for, or on behalf of, the religious order as its agent.

Effect of employee status.   Ordinarily, if your services are not considered directed or required of you by the order, you and the outside party for whom you work are considered employee and employer. In this case, your earnings from the services are taxed under the rules that apply to employees in general, not under the rules for services provided as agent for the order. This result is true even if you have taken a vow of poverty.

Example.

Pat Brown and Chris Green are members of a religious order and have taken vows of poverty. They renounce all claims to their earnings. The earnings belong to the order.

Pat is a licensed attorney. The superiors of the order instructed her to get a job with a law firm. Pat joined a law firm as an employee and, as she requested, the firm made the salary payments directly to the order.

Chris is a secretary. The superiors of the order instructed him to accept a job with the business office of the church that supervises the order. Chris took the job and gave all his earnings to the order.

Pat's services are not duties required by the order. Her earnings are subject to social security and Medicare tax under FICA and to federal income tax.

Chris' services are duties required by the order. He is acting as an agent of the order and not as an employee of a third party. He does not include the earnings in gross income, and they are not subject to income tax withholding or to social security and Medicare tax under FICA or SECA.

Christian Science Practitioners and Readers

Services you perform as a Christian Science practitioner or reader in the exercise of your profession are ministerial services. Amounts you receive for performing these services are generally subject to SE tax. You may request an exemption from SE tax, discussed next, which applies only to those services.

Exemption From Self-Employment (SE) Tax

You can request an exemption from SE tax if you are a member of the clergy (minister, member of a religious order, or Christian Science practitioner or reader) or a member of a recognized religious sect.

Generally, members of religious orders who have taken a vow of poverty are already exempt from paying SE tax, as discussed earlier under Members of Religious Orders under Social Security Coverage. They do not have to request the exemption.

Who cannot be exempt.   You cannot be exempt from SE tax if you made one of the following elections to be covered under social security. These elections are irrevocable.
  • You elected to be covered under social security by filing Form 2031, Revocation of Exemption From Self-Employment Tax for Use by Ministers, Members of Religious Orders, and Christian Science Practitioners, for your 1986, 1987, 2000, or 2001 tax year.

  • You elected before 1968 to be covered under social security for your ministerial services.

Requesting exemption.    Table 2, earlier, briefly summarizes the procedure for requesting exemption from the SE tax. More detailed explanations follow.

If you are a minister, member of a religious order, or Christian Science practitioner, an approved exemption only applies to earnings you receive for ministerial services, discussed earlier. It does not apply to any other self-employment income.

Table 2. The Self-Employment Tax Exemption Application and Approval Process

  Who Can Apply
Members of the Clergy Members of Recognized  
Religious Sects
How File Form 4361 File Form 4029
When File by the due date (including extensions) of your income tax return for the second tax year in which you had at least $400 of net earnings from self-employment (at least part from ministerial services) File anytime
Approval If approved, you will receive an approved copy of Form 4361 If approved, you will receive an approved copy of Form 4029
Effective Date For all tax years after 1967 in which you have at least $400 of net earnings from self-employment For all tax years beginning with the first year you meet the eligibility requirements discussed later

Members of the Clergy

To claim the exemption from SE tax, you must meet all of the following conditions.

  • You file Form 4361, described below under Requesting Exemption—Form 4361 .

  • You are conscientiously opposed to public insurance because of your individual religious considerations (not because of your general conscience), or you are opposed because of the principles of your religious denomination.

  • You file for other than economic reasons.

  • You inform the ordaining, commissioning, or licensing body of your church or order that you are opposed to public insurance if you are a minister or a member of a religious order (other than a vow-of-poverty member). This requirement does not apply to Christian Science practitioners or readers.

  • You establish that the organization that ordained, commissioned, or licensed you, or your religious order, is a tax-exempt religious organization.

  • You establish that the organization is a church or a convention or association of churches.

  • You did not make an election discussed earlier under Who cannot be exempt .

  • You sign and return the statement the IRS mails to you to certify that you are requesting an exemption based on the grounds listed on the statement.

Requesting Exemption—Form 4361

To request exemption from SE tax, file Form 4361 in triplicate (original and two copies) with the IRS.

The IRS will return to you a copy of the Form 4361 that you filed indicating whether it has approved your exemption. If it is approved, keep the approved copy of Form 4361 in your permanent records.

When to file.   File Form 4361 by the date your income tax return is due, including extensions, for the second tax year in which both of the following are true.
  1. You have net earnings from self-employment of at least $400.

  2. Any part of those net earnings was from ministerial services you performed as a:

    1. Minister,

    2. Member of a religious order, or

    3. Christian Science practitioner or reader.

The 2 years do not have to be consecutive tax years.

  
The approval process can take some time, so you should file Form 4361 as soon as possible.

Example 1.

Rev. Lawrence Jaeger, a clergyman ordained in 2013, has net self-employment earnings as a minister of $450 in 2013 and $500 in 2014. He must file his application for exemption by the due date, including extensions, for his 2014 income tax return. However, if Rev. Jaeger does not receive IRS approval for an exemption by April 15, 2015, his SE tax for 2014 is due by that date.

Example 2.

Rev. Louise Wolfe has only $300 in net self-employment earnings as a minister in 2013, but earned more than $400 in 2012 and expects to earn more than $400 in 2014. She must file her application for exemption by the due date, including extensions, for her 2014 income tax return. However, if she does not receive IRS approval for an exemption by April 15, 2015, her SE tax for 2014 is due by that date.

Example 3.

In 2011, Rev. David Moss was ordained a minister and had $700 in net self-employment earnings as a minister. In 2012, he received $1,000 as a minister, but his related expenses were over $1,000. Therefore, he had no net self-employment earnings as a minister in 2012. Also in 2012, he opened a book store and had $8,000 in net self-employment earnings from the store. In 2013, he had net self-employment earnings of $1,500 as a minister and $10,000 net self-employment earnings from the store.

Rev. Moss had net earnings from self-employment in 2011 and 2013 that were $400 or more each year, and part of the self-employment earnings in each of those years was for his services as a minister. Thus, he must file his application for exemption by the due date, including extensions, for his 2013 income tax return.

Death of individual.   The right to file an application for exemption ends with an individual's death. A surviving spouse, executor, or administrator cannot file an exemption application for a deceased clergy member.

Effective date of exemption.   An approved exemption is effective for all tax years after 1967 in which you have $400 or more of net earnings from self-employment and any part of those earnings is for services as a member of the clergy. Once the exemption is approved, it is irrevocable.

Example.

Rev. Trudy Austin, ordained in 2010, had $400 or more in net self-employment earnings as a minister in both 2010 and 2013. She files an application for exemption on February 20, 2014. If an exemption is granted, it is effective for 2010 and the following years.

Refunds of SE tax.   If, after receiving an approved Form 4361, you find that you overpaid SE tax, you can file a claim for refund on Form 1040X. Generally, for a refund, you must file Form 1040X within 3 years from the date you filed the return or within 2 years from the date you paid the tax, whichever is later. A return you filed, or tax you paid, before the due date is considered to have been filed or paid on the due date.

  If you file a claim after the 3-year period but within 2 years from the time you paid the tax, the credit or refund will not be more than the tax you paid within the 2 years immediately before you file the claim.

Members of Recognized Religious Sects

If you are a member of a recognized religious sect, or a division of a recognized religious sect, you can apply for an exemption from payment of social security and Medicare taxes on both your self-employment income and the wages you earn from an employer who also has an exemption.

Exception.   If you received social security benefits or payments, or anyone else received these benefits or payments based on your wages or self-employment income, you cannot apply. However, if you pay your benefits back, you may be considered for exemption. Contact your local Social Security Administration office to find out the amount you must pay back.

Eligibility requirements.   To claim this exemption from SE tax, all the following requirements must be met.
  1. You must file Form 4029, discussed later under Requesting Exemption—Form 4029 .

  2. As a follower of the established teachings of the sect or division, you must be conscientiously opposed to accepting benefits of any private or public insurance that makes payments for death, disability, old age, retirement, or medical care, or provides services for medical care.

  3. You must waive all rights to receive any social security payment or benefit and agree that no benefits or payments will be made to anyone else based on your wages and self-employment income.

  4. The Commissioner of Social Security must determine that:

    1. Your sect or division has the established teachings as described in (2) above,

    2. It is the practice, and has been for a substantial period of time, for members of the sect or division to provide for their dependent members in a manner that is reasonable in view of the members' general level of living, and

    3. The sect or division has existed at all times since December 31, 1950.

Requesting Exemption—Form 4029

To request the exemption, file Form 4029 in triplicate (original and two copies) with the Social Security Administration at the address shown on the form. The sect or division must complete part of the form.

The IRS will return to you a copy of the Form 4029 that you filed indicating whether it has approved your exemption. If it is approved, keep the approved copy of Form 4029 in your permanent records.

When to file.   You can file Form 4029 at any time.

  If you have an approved exemption from SE tax and for some reason that approved exemption ended, you must file a new Form 4029 if you subsequently meet the eligibility requirements, discussed earlier. See Effective date of exemption next for information on when the newly approved exemption would become effective.

   If you have a previously approved exemption from SE tax and you change membership to another recognized religious sect, without any change to your eligibility requirements, then you do not need to file a new Form 4029.

Effective date of exemption.   An approved exemption from SE tax generally is effective for all tax years beginning with the first year you meet the eligibility requirements discussed earlier. (For example, if you meet the eligibility requirements in 2011, you file Form 4029 in 2012, and the IRS approves your exemption in 2013, your exemption is effective for tax year 2011 and all later years.)

  The exemption will end if you fail to meet the eligibility requirements or if the Commissioner of Social Security determines that the sect or division fails to meet them. You must notify the IRS within 60 days if you are no longer a member of the religious group, or if you no longer follow the established teachings of this group. The exemption will end for the tax year where you or your sect/division first fails to meet the eligibility requirements.

Refunds of SE tax paid.    To get a refund of any SE tax you paid while the exemption was in effect, file Form 1040X. For information on filing this form, see Refunds of SE tax under Requesting Exemption—Form 4361, earlier.

Exemption From FICA Taxes

Generally, under FICA, the employer and the employee each pay half of the social security and Medicare tax. Both the employee and the employer, if they meet the eligibility requirements discussed earlier, can apply to be exempt from their share of FICA taxes on wages paid by the employer to the employee.

A partnership in which each partner holds a religious exemption from social security and Medicare is an employer for this purpose.

If the employer's application is approved, the exemption will apply only to FICA taxes on wages paid to employees who also received an approval of identical applications.

Information for employers.   If you have an approved Form 4029 and you have an employee who has an approved Form 4029, do not report wages you paid to the employee as social security and Medicare wages.

  If you have an employee who does not have an approved Form 4029, you must withhold the employee's share of social security and Medicare taxes and pay the employer's share.

Form W-2.   When preparing a Form W-2 for an employee with an approved Form 4029, enter “Form 4029” in box 14, “Other.” Do not make any entries in boxes 3, 4, 5, or 6.

Forms 941, 943, and 944.   If both you and your employee have received approved Forms 4029, do not include these exempt wages on the following forms. Instead, follow the instructions given below.
  • Form 941, Employer's QUARTERLY Federal Tax Return: check the box on line 4 and enter “Form 4029” in the empty space below the check box.

  • Form 943, Employer's Annual Federal Tax Return for Agricultural Employees: enter “Form 4029” on the dotted line next to the lines 2 and 4 entry spaces.

  • Form 944, Employer's ANNUAL Federal Tax Return: check the box on line 3 and enter “Form 4029” in the empty space below the check box.

Effective date.   An approved exemption from FICA becomes effective on the first day of the first calendar quarter after the quarter in which you file Form 4029. The exemption will end on the last day of the calendar quarter before the quarter in which the employer, employee, sect, or division fails to meet the requirements.

Self-Employment Tax: Figuring Net Earnings

There are two methods for figuring your net earnings from self-employment as a member of the clergy or a religious worker.

  • Regular method.

  • Nonfarm optional method.

You may find Worksheets 1 through 4 helpful in figuring your net earnings from self-employment. Blank worksheets are in the back of this publication, after the Comprehensive Example.

Regular Method

Most people use the regular method. Under this method, figure your net earnings from self-employment by totaling your gross income for services you performed as a minister, a member of a religious order who has not taken a vow of poverty, or a Christian Science practitioner or reader. Then, subtract your allowable business deductions and multiply the difference by 92.35% (.9235). Use Schedule SE (Form 1040) to figure your net earnings and SE tax.

If you are an employee of a church that elected to exclude you from FICA coverage, figure net earnings by multiplying your church wages shown on Form W-2 by 92.35% (.9235). Do not reduce your wages by any business deductions when making this computation. Use Schedule SE (Form 1040), Section B, to figure your net earnings and SE tax.

If you have an approved exemption, or you are automatically exempt, do not include the income or deductions from ministerial services in figuring your net earnings from self-employment.

Amounts included in gross income.   To figure your net earnings from self-employment (on Schedule SE (Form 1040)), include in gross income:
  1. Salaries and fees for your ministerial services (discussed earlier),

  2. Offerings you receive for marriages, baptisms, funerals, masses, etc.,

  3. The value of meals and lodging provided to you, your spouse, and your dependents for your employer's convenience,

  4. The fair rental value of a parsonage provided to you (including the cost of utilities that are furnished) and the rental allowance (including an amount for payment of utilities) paid to you, and

  5. Any amount a church pays toward your income tax or SE tax, other than withholding the amount from your salary. This amount is also subject to income tax.

  For the income tax treatment of items (2) and (4), see Income Tax: Income and Expenses , later.

Example.

Pastor Roger Adams receives an annual salary of $39,000 as a full-time minister. The $39,000 includes $5,000 that is designated as a rental allowance to pay utilities. His church owns a parsonage that has a fair rental value of $12,000 per year. The church gives Pastor Adams the use of the parsonage. He is not exempt from SE tax. He must include $51,000 ($39,000 plus $12,000) when figuring his net earnings for SE tax purposes.

The results would be the same if, instead of the use of the parsonage and receipt of the rental allowance for utilities, Pastor Adams had received an annual salary of $51,000 of which $17,000 ($5,000 plus $12,000) per year was designated as a rental allowance.

Overseas duty.   Your net earnings from self-employment are determined without any foreign earned income exclusion or the foreign housing exclusion or deduction if you are a U.S. citizen or resident alien serving abroad and living in a foreign country.

  For information on excluding foreign earned income or the foreign housing amount, see Publication 54.

Example.

Diane Jones was the minister of a U.S. church in Mexico. She earned $35,000 in that position and was able to exclude it all for income tax purposes under the foreign earned income exclusion. The United States does not have a social security agreement with Mexico, so Mrs. Jones is subject to U.S. SE tax and must include $35,000 when figuring net earnings from self-employment.

Specified U.S. possessions.    The exclusion from gross income for amounts derived from American Samoa or Puerto Rico does not apply in computing net earnings from self-employment. Also see Residents of Puerto Rico, the U.S. Virgin Islands, Guam, the CNMI, and American Samoa , earlier, under U.S. Citizens and Resident and Nonresident Aliens.

Amounts not included in gross income.   Do not include the following amounts in gross income when figuring your net earnings from self-employment.
  • Offerings that others made to the church.

  • Contributions by your church to a tax-sheltered annuity plan set up for you, including any salary reduction contributions (elective deferrals) that are not included in your gross income.

  • Pension payments or retirement allowances you receive for your past ministerial services.

  • The rental value of a parsonage or a parsonage allowance provided to you after you retire.

Allowable deductions.   When figuring your net earnings from self-employment, deduct all your expenses related to your ministerial services performed as a self-employed person. These are ministerial expenses you incurred while working other than as a common-law employee of the church. They include expenses incurred in performing marriages and baptisms, and in delivering speeches. Deduct these expenses on Schedule C or C-EZ (Form 1040), and carry the net amount to line 2 of Schedule SE (Form 1040), Section A or B.

  Wages earned as a common-law employee (explained earlier) of a church are generally subject to self-employment tax unless an exemption is requested, as discussed earlier under Exemption From Self-Employment (SE) Tax . Subtract any allowable expenses (including unreimbursed employee business expenses) from those wages, include the net amount on line 2 of Schedule SE (Form 1040), Section A or B, and attach an explanation. Do not complete Schedule C or C-EZ (Form 1040). However, for income tax purposes, the expenses are allowed only as an itemized deduction on Schedule A (Form 1040) to the extent they exceed 2% of adjusted gross income.

Employee reimbursement arrangements.   If you received an advance, allowance, or reimbursement for your employee expenses, how you report this amount and your employee expenses depends on whether your employer reimbursed you under an accountable plan or a nonaccountable plan. Ask your employer if you are not sure if it reimburses you using an accountable or a nonaccountable plan.

Accountable plans.   To be an accountable plan, your employer's reimbursement arrangement must include all three of the following rules.
  • Your expenses must have a business connection—that is, you must have paid or incurred deductible expenses while performing services as an employee of your employer.

  • You must adequately account to your employer for these expenses within a reasonable period of time.

  • You must return any excess reimbursement or allowance within a reasonable period of time.

  The reimbursement is not reported on your Form W-2. Generally, if your expenses equal your reimbursement, you have no deduction. If your expenses are more than your reimbursement, you can deduct your excess expenses for SE tax and income tax purposes.

Nonaccountable plan.   A nonaccountable plan is a reimbursement arrangement that does not meet all three of the rules listed under Accountable plans above. In addition, even if your employer has an accountable plan, the following payments will be treated as being paid under a nonaccountable plan.
  • Excess reimbursements you fail to return to your employer.

  • Reimbursement of nondeductible expenses related to your employer's business.

  Your employer will combine any reimbursement paid to you under a nonaccountable plan with your wages, salary, or other compensation and report the combined total in box 1 of your Form W-2. Since reimbursements under a nonaccountable plan are included in your gross income, you can deduct your related expenses (for SE tax and income tax purposes) regardless of whether they are more than, less than, or equal to your reimbursement.

  For more information on accountable and nonaccountable plans, see Publication 463, Travel, Entertainment, Gift, and Car Expenses.

Married Couple Missionary Team

If both spouses are duly ordained, commissioned, or licensed ministers of a church and have an agreement that each will perform specific services for which they are paid jointly or separately, they must divide the self-employment income according to the agreement.

If the agreement is with one spouse only and the other spouse is not paid for any specific duties, amounts received for their services are included only in the self-employment income of the spouse having the agreement.

Earnings Subject to SE Tax

For 2013, the maximum net earnings from self-employment subject to social security (old age, survivors, and disability insurance) tax is $113,700 minus any wages and tips you earned that were subject to social security tax. The tax rate for the social security part is 12.4%. In addition, all of your net earnings are subject to the Medicare (hospital insurance) part of the SE tax. This tax rate is 2.9%. The combined self-employment tax rate is 15.3%.

Additional Medicare Tax.   Beginning in 2013, a 0.9% Additional Medicare Tax applies to Medicare wages, railroad retirement (RRTA) compensation, and self-employment income that are more than:
  • $125,000 if married filing separately,

  • $250,000 if married filing jointly, or

  • $200,000 for any other filing status.

Medicare wages and self-employment income are combined to determine if income exceeds the threshold. A self-employment loss is not considered for purposes of this tax. RRTA compensation is separately compared to the threshold. For more information, see Form 8959, Additional Medicare Tax, and its separate instructions.

Nonfarm Optional Method

You may be able to use the nonfarm optional method for figuring your net earnings from self-employment. In general, the nonfarm optional method is intended to permit continued coverage for social security and Medicare purposes when your income for the tax year is low.

You may use the nonfarm optional method if you meet all the following tests.

  1. You are self-employed on a regular basis. You meet this test if your actual net earnings from self-employment were $400 or more in at least 2 of the 3 tax years before the one for which you use this method. The net earnings can be from either farm or nonfarm earnings or both.

  2. You have used this method less than 5 prior years. (There is a 5-year lifetime limit.) The years do not have to be consecutive.

  3. Your net nonfarm profits were:

    1. Less than $5,024, and

    2. Less than 72.189% of your gross nonfarm income.

If you meet all three tests, use Table 3 to figure your net earnings from self-employment under the nonfarm optional method.

Table 3.Figuring Nonfarm Net Earnings

IF your gross nonfarm income is ... THEN your net earnings are equal to ...
$6,960 or less Two-thirds of your gross nonfarm income.
More than $6,960 $4,640.

Actual net earnings.   Multiply your total earnings subject to SE tax by 92.35% (.9235) to get actual net earnings. Actual net earnings are equivalent to net earnings under the “Regular Method.

More information.   For more information on the nonfarm optional method, see Publication 334, Tax Guide for Small Business, and the Schedule SE (Form 1040) instructions.

Income Tax: Income and Expenses

Some income and expense items are treated the same for both income tax and SE tax purposes and some are treated differently.

Note.

For purposes of this section, references to members of the clergy are only to ministers or members of a religious order.

Income Items

The tax treatment of offerings and fees, outside earnings, rental allowances, rental value of a parsonage, earnings of members of religious orders, and foreign earned income is discussed here.

Offerings and Fees

If you are a member of the clergy, you must include in your income offerings and fees you receive for marriages, baptisms, funerals, masses, etc., in addition to your salary. If the offering is made to the religious institution, it is not taxable to you.

Outside Earnings

If you are a member of a religious organization and you give your outside earnings to the organization, you still must include the earnings in your income. However, you may be entitled to a charitable contribution deduction for the amount paid to the organization. For more information, see Publication 526.

Exclusion of Rental Allowance and Fair Rental Value of a Parsonage

Ordained, commissioned, or licensed ministers of the gospel may be able to exclude from income tax the rental allowance or fair rental value of a parsonage that is provided to them as pay for their services. Services include:

  • Ministerial services, discussed earlier,

  • Administrative duties and teaching at theological seminaries, and

  • The ordinary duties of a minister performed as an employee of the United States (other than as a chaplain in the Armed Forces), a state, possession, political subdivision, or the District of Columbia.

This exclusion applies only for income tax purposes. It does not apply for SE tax purposes, as discussed earlier under Amounts included in gross income under Self-Employment Tax: Figuring Net Earnings.

Designation requirement.   The church or organization that employs you must officially designate the payment as a housing allowance before it makes the payment. It must designate a definite amount. It cannot determine the amount of the housing allowance at a later date. If the church or organization does not officially designate a definite amount as a housing allowance, you must include your total salary in your income.

  If you are employed and paid by a local congregation, a resolution by a national church agency of your denomination does not effectively designate a housing allowance for you. The local congregation must officially designate the part of your salary that is a housing allowance. However, a resolution of a national church agency can designate your housing allowance if you are directly employed by the national agency.

Rental allowances.   If you receive in your salary an amount officially designated as a rental allowance (including an amount to pay utility costs), you can exclude the allowance from your gross income if:
  • You use the amount to provide or rent a home, and

  • The amount is not more than reasonable pay for your services.

  The amount you exclude cannot be more than the fair rental value of the home, including furnishings, plus the cost of utilities.

Fair rental value of parsonage.   You can exclude from gross income the fair rental value of a house or parsonage, including utilities, furnished to you as part of your earnings. However, the exclusion cannot be more than the reasonable pay for your services. If you pay for the utilities, you can exclude any allowance designated for utility costs, up to your actual cost.

Example.

Rev. Joanna Baker is a full-time minister. The church allows her to use a parsonage that has an annual fair rental value of $24,000. The church pays her an annual salary of $67,000, of which $7,500 is designated for utility costs. Her actual utility costs during the year were $7,000.

For income tax purposes, Rev. Baker excludes $31,000 from gross income ($24,000 fair rental value of the parsonage plus $7,000 from the allowance for utility costs). She will report $60,000 ($59,500 salary plus $500 of unused utility allowance). Her income for SE tax purposes, however, is $91,000 ($67,000 salary + $24,000 fair rental value of the parsonage).

Home ownership.   If you own your home and you receive as part of your salary a housing or rental allowance, you may exclude from gross income the smallest of:
  • The amount actually used to provide a home,

  • The amount officially designated as a rental allowance, or

  • The fair rental value of the home, including furnishings, utilities, garage, etc.

Excess rental allowance.   You must include in gross income the amount of any rental allowance that is more than the smallest of:
  • Your reasonable salary,

  • The fair rental value of the home plus utilities, or

  • The amount actually used to provide a home.

  Include in the total on Form 1040, line 7. On the dotted line next to line 7, enter “Excess allowance” and the amount.

You may deduct the home mortgage interest and real estate taxes paid on your home even though you pay all or part of those expenses with funds you get through a tax-free rental or parsonage allowance. However, you can only deduct these expenses as itemized deductions on Schedule A (Form 1040).

Retired ministers.   If you are a retired minister, you can exclude from your gross income the rental value of a home (plus utilities) furnished to you by your church as a part of your pay for past services, or the part of your pension that was designated as a rental allowance. However, a minister's surviving spouse cannot exclude the rental value unless the rental value is for ministerial services he or she performs or performed.

Teachers or administrators.   If you are a minister employed as a teacher or administrator by a church school, college, or university, you are performing ministerial services for purposes of the housing exclusion. However, if you perform services as a teacher or administrator on the faculty of a nonchurch college, you cannot exclude from your income a housing allowance or the value of a home that the college provides to you.

  
If you live in faculty lodging as an employee of an educational institution or academic health center, all or part of the value of that lodging may be nontaxable under a different rule. In Publication 525, see Faculty lodging in the discussion on meals and lodging under Fringe Benefits.

  If you serve as a minister of music or minister of education, or serve in an administrative or other function of your religious organization, but are not authorized to perform substantially all of the religious duties of an ordained minister in your church (even if you are commissioned as a minister of the gospel), the housing exclusion does not apply to you.

Theological students.   If you are a theological student serving a required internship as a part-time or assistant pastor, you cannot exclude a parsonage or rental allowance from your income unless you are ordained, commissioned, or licensed as a minister.

Traveling evangelists.   You can exclude a designated rental allowance from out-of-town churches if you meet all of the following requirements.
  • You are an ordained minister.

  • You perform ministerial services at churches located away from your community.

  • You actually use the rental allowance to maintain your permanent home.

Cantors.   If you have a bona fide commission and your congregation employs you on a full-time basis to perform substantially all the religious functions of the Jewish faith, you can exclude a rental allowance from your gross income.

Earnings—Members of Religious Orders

Your earnings may be exempt from both income tax and SE tax if you are a member of a religious order who:

  • Has taken a vow of poverty,

  • Receives earnings for services performed as an agent of the order and in the exercise of duties required by the order, and

  • Renounces the earnings and gives them to the order.

See Members of Religious Orders , earlier, under Social Security Coverage.

Foreign Earned Income

Certain income may be exempt from income tax if you work in a foreign country or in a specified U.S. possession. Publication 54 discusses the foreign earned income exclusion. Publication 570, Tax Guide for Individuals With Income From U.S. Possessions, covers the rules for taxpayers with income from U.S. possessions. You can get these free publications from the Internal Revenue Service at IRS.gov or from most U.S. Embassies or consulates.

Expense Items

The tax treatment of ministerial trade or business expenses, expenses allocable to tax-free income, and health insurance costs is discussed here.

Ministerial Trade or Business Expenses as an Employee

When you figure your income tax, you must itemize your deductions on Schedule A (Form 1040) to claim allowable deductions for ministerial trade or business expenses incurred while working as an employee. You also may have to file Form 2106, Employee Business Expenses (or Form 2106-EZ, Unreimbursed Employee Business Expenses).

You claim these expenses as miscellaneous itemized deductions that are subject to the 2%-of-adjusted-gross-income (AGI) limit. See Publication 529 for more information on this limit.

However, you cannot deduct any of your employee business expenses that are allocable to tax-free income (discussed next).

Expenses Allocable to Tax-Free Income

If you receive a rental or parsonage allowance that is exempt from income tax (tax free), you must allocate a portion of the expenses of operating your ministry to that tax-free income. You cannot deduct the portion of your expenses that you allocate to your tax-free rental or parsonage allowance.

Exception.   This rule does not apply to your deductions for home mortgage interest or real estate taxes on your home.

Figuring the allocation.   Figure the portion of your otherwise deductible expenses that you cannot deduct (because you must allocate that portion to tax-free income) by multiplying the expenses by the following fraction:

  
  Tax-free rental or parsonage allowance  
  All income (taxable and tax free) earned from your ministry  
     

  When figuring the allocation, include the income and expenses related to the ministerial duties you perform both as an employee and as a self-employed person.

  
Reduce your otherwise deductible expenses only in figuring your income tax, not your SE tax.

Example.

Rev. Charles Ashford received $40,000 in earnings for ministerial services consisting of a $28,000 salary for ministerial services performed as an employee, $2,000 for weddings and baptisms performed as a self-employed person, and a $10,000 tax-free parsonage allowance. He incurred $4,000 of unreimbursed expenses connected with his earnings for ministerial services. $3,500 of the $4,000 is for employee expenses related to his ministerial salary, and $500 is related to the weddings and baptisms he performed as a self-employed person.

Rev. Ashford figures the nondeductible (tax-free) portion of expenses related to his ministerial salary as follows:

($10,000 ÷ $40,000) x $3,500 = $875
 

Rev. Ashford figures the nondeductible (tax-free) portion of expenses related to his wedding and baptism income as follows:

($10,000 ÷ $40,000) x $500 = $125

Required statement.   If you receive a tax-free rental or parsonage allowance and have ministerial expenses, attach a statement to your tax return. The statement must contain all of the following information.
  • A list of each item of taxable ministerial income by source (such as wages, salary, weddings, baptisms, etc.) plus the amount.

  • A list of each item of tax-free ministerial income by source (parsonage allowance) plus the amount.

  • A list of each item of otherwise deductible ministerial expenses plus the amount.

  • How you figured the nondeductible part of your otherwise deductible expenses.

  • A statement that the other deductions claimed on your tax return are not allocable to your tax-free income.

  See the attachments prepared for the Comprehensive Example , later. Following the example, you will find blank worksheets for your own use.

Health Insurance Costs of Self-Employed Ministers

If you are self-employed, you may be able to deduct the amount you paid in 2013 for medical and dental insurance and qualified long-term care insurance for you, your spouse, and your dependents.

If you qualify, you can take this deduction as an adjustment to income on Form 1040, line 29. See the Instructions for Form 1040 to figure your deduction.

The following special rules apply to the self-employed health insurance deduction.

  • You cannot take a medical expense deduction on Schedule A (Form 1040) for any expenses you claim for purposes of the self-employed health insurance deduction.

  • You cannot take the deduction for any month you are eligible to participate in a subsidized plan of your (or your spouse's) employer.

  • The deduction cannot exceed your net earnings from the business under which the insurance plan is established. Your net earnings under this rule do not include the income you earned as a common-law employee (discussed earlier) of a church.

More information.   For more information about the self-employed health insurance deduction, see chapter 6 in Publication 535.

Deduction for SE Tax

You can deduct one-half of your SE tax in figuring adjusted gross income. This is an income tax deduction only, on Form 1040, line 27.

Do not claim this deduction in figuring net earnings from self-employment subject to SE tax.

Income Tax Withholding and Estimated Tax

The federal income tax is a pay-as-you-go tax. You must pay the tax as you earn or receive income during the year. An employee usually has income tax withheld from his or her wages or salary. However, your salary is not subject to federal income tax withholding if both of the following conditions apply.

  • You are a duly ordained, commissioned, or licensed minister, a member of a religious order (who has not taken a vow of poverty), or a Christian Science practitioner or reader.

  • Your salary is for ministerial services (see Ministerial Services , earlier).

If your salary is not subject to withholding, or if you do not pay enough tax through withholding, you may need to make estimated tax payments to avoid penalties for not paying enough tax as you earn your income.

You generally must make estimated tax payments if you expect to owe taxes, including SE tax, of $1,000 or more, when you file your return.

Determine your estimated tax by using the worksheets in Publication 505, Tax Withholding and Estimated Tax. Pay the entire estimated tax for 2014 or the first installment by April 15, 2014. See Form 1040-ES for the different payment methods. The April 15 date applies whether or not your tax home and your abode are outside the United States and Puerto Rico. For more information, see chapter 2 of Publication 505.

If you perform your services as a common-law employee of the church and your salary is not subject to income tax withholding, you can enter into a voluntary withholding agreement with the church to cover any income and SE tax that may be due.

Filing Your Return

You must file an income tax return for 2013 if your gross income was at least the amount shown in the third column of Table 4 above.

Table 4.2013 Filing Requirements for Most Taxpayers

IF your filing status is ... AND at the end of 2013 
you were* ...
THEN file a return if your gross income** was at least ...
single under age 65 
65 or older
  $10,000 
$11,500
 
married filing jointly*** under 65 (both spouses) 
65 or older (one spouse) 
65 or older (both spouses)
  $20,000 
$21,200 
$22,400
 
married filing separately any age   $3,900  
head of household under 65 
65 or older
  $12,850 
$14,350
 
qualifying widow(er) with dependent child under 65 
65 or older
  $16,100 
$17,300
 
* If you were born on January 1, 1949, you are considered to be age 65 at the end of 2013.
** Gross income means all income you received in the form of money, goods, property, and services that is not exempt from tax, including any income from sources outside the United States or from the sale of your main home (even if you can exclude part or all of it). Do not include any social security benefits unless (a) you are married filing a separate return and you lived with your spouse at any time in 2013, or (b) one-half of your social security benefits plus your other gross income and any tax-exempt interest is more than $25,000 ($32,000 if married filing jointly). If (a) or (b) applies, see the instructions for Form 1040, lines 20a and 20b, to figure the taxable part of social security benefits you must include in gross income. Gross income includes gains, but not losses, reported on Form 8949 or Schedule D (Form 1040). Gross income from a business means, for example, the amount on Schedule C (Form 1040), line 7, or Schedule F (Form 1040), line 9. But, in figuring gross income, do not reduce your income by any losses, including any loss on Schedule C (Form 1040), line 7, or Schedule F (Form 1040), line 9.
*** If you did not live with your spouse at the end of 2013 (or on the date your spouse died) and your gross income was at least $3,900, you must file a return regardless of your age.

Additional requirements.   Even if your income was less than the amount shown in Table 4, you must file an income tax return on Form 1040, and attach a completed Schedule SE (Form 1040), if:

  
  • You are not exempt from SE tax, and you have net earnings from self-employment (discussed earlier under Self-Employment Tax: Figuring Net Earnings ) of $400 or more in the tax year,

  • You are exempt from SE tax on earnings from ministerial services and you have $400 or more of other net earnings subject to SE tax, or

  • You had wages of $108.28 or more from an electing church or church-controlled organization (see Coverage of Religious Workers (Church Employees) , earlier, under Social Security Coverage).

Self-employment tax.   If you are liable for SE tax, you must file Schedule SE (Form 1040) with your return.

  If you filed Form 4361 and did not receive approval from the IRS, you must pay SE tax on your ministerial earnings, as explained earlier. You should report ministerial earnings and expenses from nonemployee ministerial services on Schedule C or C-EZ (Form 1040). You should then carry the net amount over to line 2 of Schedule SE (Form 1040), Section A or B. However, if you were a duly ordained minister who was an employee of a church and you must pay SE tax on the wages you earned for those services, do not report those wages on Schedule C or C-EZ (Form 1040). Instead, report those wages less any allowable expenses (including any unreimbursed employee business expenses), on line 2 of Schedule SE (Form 1040), Section A or B, and attach an explanation.

Note.

For income tax purposes, the unreimbursed employee business expenses that you incurred as an employee of the church and subtracted from your wages on line 2 of Schedule SE (Form 1040) are allowed only as an itemized deduction on Schedule A (Form 1040) if they exceed 2% of your adjusted gross income. You cannot deduct these expenses on Schedule C or C-EZ (Form 1040) as a trade or business expense.

Exemption from SE tax.   If you filed Form 4361 and received IRS approval not to be taxed on your ministerial earnings, and you do not have any other income subject to SE tax, do not file Schedule SE (Form 1040). Instead, enter “Exempt—Form 4361” on the dotted line next to Form 1040, line 56. However, if you had net earnings from another trade or business of $400 or more subject to SE tax, see line A at the top of Schedule SE (Form 1040), Section B.

   If you filed Form 4029 and received IRS approval not to be taxed on those earnings, and you do not have any other income subject to SE tax, do not file Schedule SE (Form 1040). Instead, enter “Exempt—Form 4029” on the dotted line next to Form 1040, line 56.

More information.   For more information on filing your return, including when and where to file it, see the Instructions for Form 1040.

Retirement Savings Arrangements

Retirement savings arrangements are plans that offer you a tax-favored way to save for your retirement. You generally can deduct your contributions to the plan. Your contributions and the earnings on them are not taxed until they are distributed.

Retirement plans for the self-employed.   To set up one of the following plans you must be self-employed.
  • SEP (simplified employee pension) plan.

  • SIMPLE (savings incentive match plan for employees) plan.

  • Qualified retirement plan (also called a Keogh or H.R. 10 plan).

  The common-law rules determine whether you are an employee or a self-employed person for purposes of setting up a retirement plan. See Employment status for other tax purposes under Coverage of Members of the Clergy, earlier. This result is true even if your compensation for ministerial services (defined earlier) is subject to SE tax.

  For example, if a congregation pays you a salary for performing ministerial services and you are subject to the congregation's control, you generally are a common-law employee. You are not a self-employed person for purposes of setting up a retirement plan. This result is true even if your salary is subject to SE tax.

  On the other hand, amounts received directly from members of the congregation, such as fees for performing marriages, baptisms, or other personal services that you report on Schedule C or C-EZ (Form 1040), are earnings from self-employment for all tax purposes.

  For more information on establishing a SEP, SIMPLE, or qualified retirement plan, see Publication 560, Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans).

Individual retirement arrangements (IRAs).   The traditional IRA and the Roth IRA are two individual retirement arrangements you can use to save money for your retirement. Generally, your maximum contribution for 2013 to either of these plans (or to a combination of the two) is the smaller of your taxable compensation or $5,500 ($6,500 if you are age 50 or older).

  However, your maximum contribution to a Roth IRA will be further reduced or eliminated if your adjusted gross income is above a certain amount. You cannot deduct Roth IRA contributions, but if you satisfy certain requirements, all earnings in the Roth IRA are tax free and neither your nondeductible contributions nor any earnings on them are taxable when distributed.

  If you contribute to a traditional IRA, your contribution may be deductible. However, your deduction may be reduced or eliminated if you or your spouse is covered by an employer retirement plan (including, but not limited to, a SEP, SIMPLE, or qualified retirement plan).

  For more information on IRAs, see Publication 590.

Tax-sheltered annuity plans.   Church employees, members of religious orders, and duly ordained, commissioned, or licensed ministers working as ministers or chaplains can participate in tax-sheltered annuity (403(b)) plans. For more information, see Publication 571, Tax-Sheltered Annuity Plans (403(b) Plans) For Employees of Public Schools and Certain Tax-Exempt Organizations.

Deducting contributions to tax-sheltered annuity plans.   If you are an employee, your employer may exclude allowable contributions to a 403(b) plan from your income. These contributions will not be included in your total wages on your Form W-2, but you will pay tax on distributions from your plan. However, if you choose to have contributions made to a Roth contribution program, they will not be excluded from your income, but will be distributed tax free.

  You may also participate in a 403(b) plan if you are a minister or chaplain and, in the exercise of your ministry, you are either self-employed or employed by an organization that is not exempt from tax under section 501(c)(3) of the Internal Revenue Code. If either situation applies to you, you can deduct your contributions to a 403(b) plan as explained next.
  • If you are self-employed, deduct your contributions on Form 1040, line 28.

  • If you are not self-employed and your employer does not exclude your contributions from your earned income, deduct your contributions on Form 1040, line 36. Enter the amount of your deduction and “403(b)” on the dotted line next to line 36.

Retirement savings contributions credit.   You may be able to take a tax credit of up to $1,000 (up to $2,000 if filing jointly) for certain contributions you make to any of the retirement plans or IRAs discussed earlier. The credit is based on the contributions you make and your credit rate. Your credit rate can be as low as 10% or as high as 50%, depending on your adjusted gross income. Figure the credit on Form 8880, Credit for Qualified Retirement Savings Contributions.

  You cannot take the credit if any of the following apply.
  1. You were born after January 1, 1996.

  2. You were a student who during any part of 5 calendar months (not necessarily consecutive) of 2013:

    1. Was enrolled as a full-time student at a school, or

    2. Took a full-time, on-farm training course given by a school or a state, county, or local government agency.

  3. Someone, such as your parent(s), claims an exemption for you on his or her 2013 tax return.

  4. Your adjusted gross income for 2013 is more than:

    1. $59,000, if your filing status is married filing jointly,

    2. $44,250, if your filing status is head of household, or

    3. $29,500, if your filing status is single, married filing separately, or qualifying widow(er) with dependent child.

Full-time student.   You are a full-time student if you are enrolled for the number of hours or courses the school considers to be full time.

Adjusted gross income.   When figuring adjusted gross income, you must add back any exclusion or deduction claimed for the year for:
  1. Foreign earned income,

  2. Foreign housing costs,

  3. Income of bona fide residents of American Samoa, and

  4. Income of bona fide residents of Puerto Rico.

More information.   For more information about the credit, see Publication 590.

Earned Income Credit

The earned income credit is a credit for certain people who work. If you qualify for it, the earned income credit reduces the tax you owe. Even if you do not owe tax, you can get a refund of the credit.

You cannot take the credit for 2013 if your earned income (or adjusted gross income) is:

  • $14,340 or more ($19,680 or more if married filing jointly) and you do not have a qualifying child,

  • $37,870 or more ($43,210 or more if married filing jointly) and you have one qualifying child,

  • $43,038 or more ($48,378 or more if married filing jointly) and you have two qualifying children, or

  • $46,227 or more ($51,567 if married filing jointly) and you have three or more qualifying children.

Earned income.   Earned income includes your:
  1. Wages, salaries, tips, and other taxable employee compensation (even if these amounts are exempt from FICA or SECA under an approved Form 4029 or 4361), and

  2. Net earnings from self-employment that are not exempt from SECA (you do not have an approved Form 4029 or 4361) that you report on Schedule SE, line 3, with the following adjustments.

    1. Subtract the amount you claimed (or should have claimed) on Form 1040, line 27, for the deductible part of your SE tax.

    2. Add any amount from Schedule SE, Section B, line 4b and line 5a.

To figure your earned income credit, see the Form 1040 instructions for lines 64a and 64b.

  
If you are a minister and have an approved Form 4361, your earned income will still include wages and salaries earned as an employee, but it will not include amounts you received for nonemployee ministerial duties, such as fees for performing marriages and baptisms, and honoraria for delivering speeches.

More information.   For detailed rules on this credit, see Publication 596. To figure the amount of your credit, you can either fill out a worksheet or have the IRS compute the credit for you. You may need to complete Schedule EIC and attach it to your tax return.

Comprehensive Example

Rev. John White is the minister of the First United Church. He is married and has one child. The child is considered a qualifying child for the child tax credit. Mrs. Susan White is not employed outside the home. Rev. White is a common-law employee of the church, and he has not applied for an exemption from SE tax.

The church paid Rev. White a salary of $31,000. In addition, as a self-employed person, he earned $4,000 during the year for weddings, baptisms, and honoraria. He made estimated tax payments during the year totaling $7,000. The local community college paid him $3,400 for teaching a course.

Rev. and Mrs. White own a home next to the church. They make a $650 per month mortgage payment of principal and interest only. They paid $1,800 in real estate taxes for the year on the home. The church paid Rev. White $800 per month as his parsonage allowance (excluding utilities). The home's fair rental value for the year (excluding utilities) is $9,840. The utility bills for the year totaled $960. The church paid him $100 per month designated as an allowance for utility costs.

First, the parts of Rev. and Mrs. White's income tax return are explained in the order the Whites complete them. Next, the parts are illustrated in the order that Rev. White will assemble the return to send it to the IRS.

Form W-2 From Church

The church completed its Form W-2 for Rev. White as follows.

Box 1.    The church entered Rev. White's $31,000 salary.

Box 2.    The church left this box blank because Rev. White did not request federal income tax withholding.

Boxes 3 through 6.   Rev. White is considered a self-employed person for purposes of social security and Medicare tax withholding, so the church left these boxes blank.

Box 14.    The church entered Rev. White's total parsonage and utilities allowance for the year and identified them.

Form W-2 From College

The community college gave Rev. White a Form W-2 that showed the following.

Box 1.    The college entered Rev. White's $3,400 salary.

Box 2.    The college withheld $272 in federal income tax on Rev. White's behalf.

Boxes 3 and 5.    As an employee of the college, Rev. White is subject to social security and Medicare withholding on his full $3,400 salary from the college.

Box 4.    The college withheld $210.80 in social security taxes.

Box 6.    The college withheld $49.30 in Medicare taxes.

Schedule C-EZ (Form 1040)

Some of Rev. White's entries on Schedule C-EZ are explained here.

Line 1.    Rev. White reports the $4,000 from weddings, baptisms, and honoraria.

Line 2.    Rev. White reports his expenses related to the line 1 amount. He paid $87 for marriage and family booklets and drove his car 490 miles for business, mainly in connection with honoraria. Rev. White used the standard mileage rate to figure his car expense, as follows.
490 miles × 56.5 cents ($0.565) = $277
These expenses total $364 ($277 + $87). However, he cannot deduct the part of his expenses allocable to his tax-free parsonage allowance.

  First, Rev. White uses Worksheet 1 (see Attachment 1, later) to figure his percentage of tax-free income. Then he completes Worksheet 2 (see Attachment 1, later) to show that 23% (or $84 = $364 × 23% (.23)) of his business expenses are not deductible because they are allocable to his tax-free allowance. He subtracts the $84 from the $364, enters the $280 difference on line 2, and adds a note at the bottom of the page to see the attached statement.

  Rev. White attaches Worksheets 1 and 2 to his return. This is part of his required statement. See Attachment 1, later.

Line 3.    Rev. White enters his net profit of $3,720 ($4,000 − $280) on line 3 and on Form 1040, line 12.

Lines 4 through 8b.    Rev. White fills out these lines to report information about his car.

Form 2106-EZ

Rev. White fills out Form 2106-EZ to report the unreimbursed business expenses he had as a common-law employee of First United Church.

Line 1.    Before completing line 1, Rev. White fills out Part II because he used his car for church business. His records show that he drove 2,774 business miles, which he reports in Part II. Then, he figures his car expense for his line 1 entry.

  
2,774 miles × 56.5 cents ($0.565) = $1,567

Line 4.    He enters $231 for his professional publications and booklets.

Line 6.    Before entering the total expenses on line 6, Rev. White must reduce them by the amount allocable to his tax-free parsonage allowance. After completing Worksheet 3 (see Attachment 1, later), he finds that 23% [or $414 = ($1,567 + $231) × 23% (.23)] of his employee business expenses are not deductible. He subtracts $414 from $1,798 ($1,567 + $231) and enters the result, $1,384, on line 6, adding a note at the bottom of the page about the attached statement. He also enters $1,384 on Schedule A (Form 1040), line 21.

Schedule A (Form 1040)

Rev. White fills out Schedule A as explained here.

Line 6.    He deducts $1,800 in real estate taxes paid in 2013.

Line 10.    He deducts $5,572 of home mortgage interest paid in 2013 (reported on Form 1098, Mortgage Interest Statement (not shown)).

Line 16.    Rev. and Mrs. White contributed $4,800 in cash during the year to various qualifying charities. Each individual contribution was less than $250 and they have the required records for all donations.

Line 21.    Rev. White enters his $1,384 of unreimbursed employee business expenses from Form 2106-EZ, line 6.

Lines 25, 26, and 27.    He can deduct only the part of his employee business expenses that exceeds 2% of his adjusted gross income. After he completes page 1 of Form 1040, he fills out these lines to figure the amount he can deduct.

Line 29.    The total of all the Whites' itemized deductions is $12,850, which he enters here and on Form 1040, line 40.

Schedule SE (Form 1040)

After Rev. White prepares Schedule C-EZ and Form 2106-EZ, he fills out Schedule SE (Form 1040). He reads the chart on page 1 of the schedule and determines that he can use Section A—Short Schedule SE to figure his self-employment tax. Rev. White is a minister, so his salary from the church is not considered church employee income. Thus, he does not have to use Section B—Long Schedule SE. He fills out the following lines in Section A.

Line 2.    Rev. White attaches a statement (see Attachment 2, Worksheet 4, later) that explains how he figures the amount ($43,638) to enter on line 2, and adds a note at the bottom of the page to see the attached statement.

Line 4.   He multiplies $43,638 by 92.35% (.9235) to get his net earnings from self-employment ($40,300).

Line 5.   The amount on line 4 is less than $113,700, so Rev. White multiplies the amount on line 4 ($40,300) by 15.3% (.153) to get his self-employment tax of $6,166. He enters that amount here and on Form 1040, line 56.

Line 6.   Rev. White multiplies the amount on line 5 by 50% (.50) to get his deduction for the employer-equivalent portion of self-employment tax of $3,083. He enters that amount here and on Form 1040, line 27.

Form 1040

After Rev. White prepares Form 2106-EZ and the other schedules, he fills out Form 1040. He files a joint return with his wife. First, he fills out the address area and completes the appropriate lines for his filing status and exemptions. Then, he fills out the rest of the form as follows.

Line 7.    Rev. White reports $34,640. This amount is the total of his $31,000 church salary, $3,400 college salary, and $240 ($1,200 - $960), his excess utility allowance. He enters “Excess allowance $240” on the dotted line next to line 7 as directed under Excess rental allowance , earlier. His employers reported the two salaries to him in box 1 of the Forms W-2 he received.

Line 12.    He reports his net profit of $3,720 from Schedule C-EZ, line 3.

Line 27.    He enters $3,083, the deductible part of his SE tax from Schedule SE, line 6.

Line 40.    He enters $12,850, the total itemized deductions from Schedule A, line 29.

Line 51.    The Whites can take the child tax credit for their daughter, Jennifer. Rev. White figures the credit by completing the Child Tax Credit Worksheet (not shown) in the Instructions for Form 1040. He enters the $1,000 credit on line 51.

Line 56.    He enters $6,166, the self-employment tax from Schedule SE, line 5.

Line 62.    He enters $272, the federal income tax withheld, as shown in box 2 of his Form W-2 from the college.

Line 63.    He enters the $7,000 estimated tax payments he made for the year.

Line 64a.    Rev. White reads the instructions for lines 64a and 64b to see if he can claim the earned income credit. He completes Worksheet B (not illustrated) in the instructions and finds that he does not qualify for the earned income credit. He enters “No” on the dotted line next to line 64a as directed by line 5 of Worksheet B.

Line 75.   He wants to have any overpayment of tax applied to his 2014 estimated tax.

Attachment 1

Attachment 1 (Worksheets 1, 2, and 3) shows the computation of expenses that are nondeductible because they are allocable to tax-free ministerial income and the deductions allowed.

Attachment 2

Attachment 2 (Worksheet 4) shows the computation of net self-employment income.

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Forms W-2, (2) for John E. White

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Form 1040, page 1 for John E. and Susan R. White

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Form 1040, page 2

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Schedule A (Form 1040)

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Schedule C–EZ (Form 1040)

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Schedule SE (Form 1040)

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Form 2106-EZ

Attachment 1—John E. White011-00-2222 Worksheet 1. Figuring the Percentage of Tax-Free Income

Note. For each line, enter the appropriate amount in all boxes that are not shaded.

   
Source of Income 
(a) 
Taxable 
(b) 
Tax-free 
(c) 
Total 
1 W-2 salary as a minister (from box 1 of Form W-2) 1   31,000   31,000
2 Gross income from weddings, baptisms, writing, lecturing, etc. (from line 1 of Schedule C or C-EZ) 2   4,000   4,000
Note. Complete either lines 3a–3e or lines 4a–4i.      
•If your church provides you with a parsonage, complete lines 3a–3e.      
•If, instead of providing a parsonage, your church provides you with  
a rental or parsonage allowance, complete lines 4a–4i. 
     
3a 
FRV* of parsonage provided by church 3a        

Utility allowance, if any 3b        

Actual expenses for utilities 3c        
d Enter the smaller of line 3b or 3c 3d        

Excess utility allowance (subtract line 3d from line 3b) 3e        
4a 
Parsonage or rental allowance 4a 9,600      
b Utility allowance, if separate 4b 1,200      
c Total allowance (add lines 4a and 4b) 4c 10,800      

Actual expenses for parsonage 4d 9,600      
e Actual expenses for utilities 4e 960      
f Total actual expenses for parsonage and utilities (add lines 4d 
and 4e)
4f  10,560      
g FRV* of home, plus the cost of utilities 4g 10,800      

Enter the smaller of line 4c, 4f, or 4g 4h     10,560 10,560

Excess allowance (Subtract line 4h from line 4c) 4i    240   240

Ministerial income (for columns (a), (b), and (c), add lines 1 
through 4i)
5   35,240 10,560 45,800
 

 
Percentage of tax-free income: Total tax-free income (line 5(b))$10,560  
 Total income (line 5(c))$45,800
= 23%**
*FRV (Fair Rental Value): As determined objectively and between unrelated parties, what it would cost to rent a comparable home (including furnishings) in a similar location.
** This percentage of your ministerial expenses will not be deductible. Use Worksheets 2 and 3 to figure your allowable deductions.

Attachment 1—John E. White011-00-2222 (continued) Worksheet 2.Figuring the Allowable Deduction for Schedule C or C-EZ Expenses


Percentage of expenses that are nondeductible (from Worksheet 1, line 6): 23 %

Business use of car for entire year: 490 miles x 56.5 cents ($0.565). 2   277

Meals and entertainment: $ × 50% (.50) 3    

Other expenses (list item and amount)

Marriage and family booklets 4a 87  

  4b    

  4c    

  4d    

  4e    

Total other expenses (add lines 4a through 4e) 4f    87

Total Schedule C or C-EZ expenses (add lines 2, 3, and 4f) 5   364

Nondeductible part of Schedule C or C-EZ expenses (multiply line 5 by the percent in line 1) 6   84

Deduction allowed.* Subtract line 6 from line 5. Enter the result here and on Schedule C, line 27a, or Schedule C-EZ, line 2. 7   280
* None of the other deductions claimed in this return are allocable to tax-free income.
 

Worksheet 3. Figuring the Allowable Deduction for Form 2106 or 2106-EZ Expenses

  Column A Column B
1 Percentage of expenses that are nondeductible (from Worksheet 1, line 6): 23 %
2 Use of car for church business for entire year: 2,774 miles x 56.5 cents ($0.565). 2 1,567  
3 Meals and entertainment 3    
4 Other expenses (list item and amount)
a Professional publications and booklets 4a 231  
b   4b    
c   4c    
d   4d    
e   4e    
5 Total expenses. In Column A, add lines 2 and 4a through 4e and enter the result. In Column B, enter the amount from line 3. 5 1,798  
6 Enter reimbursements received for other expenses (Column A) and meals and entertainment (Column B) that were not included in box 1 of Form W-2 6    
7 Total Form 2106 or 2106-EZ unreimbursed expenses (subtract line 6 from line 5) 7 1,798  
8 In Column A, enter the amount from line 7. In Column B, multiply line 7 by 50% (.50) 8 1,798  
9 Add the amounts on line 8 of both columns and enter the total here 9 1,798  
10 Nondeductible part of Form 2106 or 2106-EZ expenses (multiply line 9 by the percent in line 1) 10 414   
11 Ministerial employee business expense deduction allowed.* Subtract line 10 from line 9. Enter the result here and on Form 2106, line 10, or Form 2106-EZ, line 6. 11   1,384
* None of the other deductions claimed in this return are allocable to tax-free income.

Attachment 2—John E. White011-00-2222 Worksheet 4.Figuring Net Self-Employment Income for Schedule SE (Form 1040)


W-2 salary as a minister (from box 1 of Form W-2) 1   31,000

Net profit from Schedule C, line 31, or Schedule C-EZ, line 3 2   3,720
3a 
Parsonage or rental allowance (from Worksheet 1, line 3a or 4a) 3a 9,600  

Utility allowance (from Worksheet 1, line 3b or 4b) 3b 1,200  

Total allowance (add lines 3a and 3b) 3c   10,800

Add lines 1, 2, and 3c 4   45,520

Schedule C or C-EZ expenses allocable to tax-free income (from Worksheet 2, line 6) 5 84  

Total unreimbursed employee business expenses after the 50% reduction for meals and entertainment (from Worksheet 3, line 9) 6 1,798  

Total business expenses not deducted in lines 1 and 2 above (add lines 5 and 6) 7   1,882

Net self-employment income. Subtract line 7 from line 4. Enter here and on Schedule SE,  
Section A, line 2, or Section B, line 2.
8   43,638

Worksheets

These worksheets are provided to help you figure your taxable ministerial income, your allowable deductions, and your net self-employment income.    

Worksheet 1. Figuring the Percentage of Tax-Free Income

Note. For each line, enter the appropriate amount in all boxes that are not shaded.

   
Source of Income 
(a) 
Taxable 
(b) 
Tax-free 
(c) 
Total 
1 W-2 salary as a minister (from box 1 of Form W-2) 1        
2 Gross income from weddings, baptisms, writing, lecturing, etc. (from line 1 of Schedule C or C-EZ) 2        
Note. Complete either lines 3a–3e or lines 4a–4i.      
•If your church provides you with a parsonage, complete lines 3a–3e.      
•If, instead of providing a parsonage, your church provides you with  
a rental or parsonage allowance, complete lines 4a–4i. 
     
3a 
FRV* of parsonage provided by church 3a        

Utility allowance, if any 3b        

Actual expenses for utilities 3c        
d Enter the smaller of line 3b or 3c 3d        

Excess utility allowance (subtract line 3d from line 3b) 3e        
4a 
Parsonage or rental allowance 4a        
b Utility allowance, if separate 4b        
c Total allowance (add lines 4a and 4b) 4c        

Actual expenses for parsonage 4d        
e Actual expenses for utilities 4e        
f Total actual expenses for parsonage and utilities (add lines 4d  
and 4e)
4f         
g FRV* of home, plus the cost of utilities 4g        

Enter the smaller of line 4c, 4f, or 4g 4h        

Excess allowance (subtract line 4h from line 4c) 4i         

Ministerial income (for columns (a), (b), and (c), add lines 1  
through 4i)
5        
 

 
Percentage of tax-free income: Total tax-free income (line 5(b))$   
Total income (line 5(c))$
= %**
*FRV (Fair Rental Value): As determined objectively and between unrelated parties, what it would cost to rent a comparable home (including furnishings) in a similar location.
** This percentage of your ministerial expenses will not be deductible. Use Worksheets 2 and 3 to figure your allowable deductions.

Worksheet 2.Figuring the Allowable Deduction for Schedule C or C-EZ Expenses


Percentage of expenses that are nondeductible (from Worksheet 1, line 6): %

Business use of car for entire year: miles x 56.5 cents ($0.565). 2    

Meals and entertainment: $ × 50% (.50) 3    

Other expenses (list item and amount)

  4a    

  4b    

  4c    

  4d    

  4e    

Total other expenses (add lines 4a through 4e) 4f     

Total Schedule C or C-EZ expenses (add lines 2, 3, and 4f) 5    

Nondeductible part of Schedule C or C-EZ expenses (multiply line 5 by the percent in line 1) 6    

Deduction allowed.* Subtract line 6 from line 5. Enter the result here and on Schedule C, line 27a, or Schedule C-EZ, line 2. 7    
* None of the other deductions claimed in this return are allocable to tax-free income.
 

Worksheet 3. Figuring the Allowable Deduction for Form 2106 or 2106-EZ Expenses

  Column A Column B
1 Percentage of expenses that are nondeductible (from Worksheet 1, line 6): %
2 Use of car for church business for entire year: miles x 56.5 cents ($0.565). 2    
3 Meals and entertainment 3    
4 Other expenses (list item and amount)
a   4a    
b   4b    
c   4c    
d   4d    
e   4e    
5 Total expenses. In Column A, add lines 2 and 4a through 4e and enter the result. In Column B, enter the amount from line 3. 5    
6 Enter reimbursements received for other expenses (Column A) and meals and entertainment (Column B) that were not included in box 1 of Form W-2 6    
7 Total Form 2106 or 2106-EZ unreimbursed expenses (subtract line 6 from line 5) 7    
8 In Column A, enter the amount from line 7. In Column B, multiply line 7 by 50% (.50) 8    
9 Add the amounts on line 8 of both columns and enter the total here 9    
10 Nondeductible part of Form 2106 or 2106-EZ expenses (multiply line 9 by the percent in line 1) 10    
11 Ministerial employee business expense deduction allowed.* Subtract line 10 from line 9. Enter the result here and on Form 2106, line 10, or Form 2106-EZ, line 6. 11    
* None of the other deductions claimed in this return are allocable to tax-free income.

Worksheet 4.Figuring Net Self-Employment Income for Schedule SE (Form 1040)


W-2 salary as a minister (from box 1 of Form W-2) 1    

Net profit from Schedule C, line 31, or Schedule C-EZ, line 3 2    
3a 
Parsonage or rental allowance (from Worksheet 1, line 3a or 4a) 3a    

Utility allowance (from Worksheet 1, line 3b or 4b) 3b    

Total allowance (add lines 3a and 3b) 3c    

Add lines 1, 2, and 3c 4    

Schedule C or C-EZ expenses allocable to tax-free income (from Worksheet 2, line 6) 5    

Total unreimbursed employee business expenses after the 50% reduction for meals and entertainment (from Worksheet 3, line 9) 6    

Total business expenses not deducted in lines 1 and 2 above (add lines 5 and 6) 7    

Net self-employment income. Subtract line 7 from line 4. Enter here and on Schedule SE,  
Section A, line 2, or Section B, line 2.
8    

How To Get Tax Help

Whether it's help with a tax issue, preparing your tax return or a need for a free publication or form, get the help you need the way you want it: online, use a smart phone, call or walk in to an IRS office or volunteer site near you.

Free help with your tax return.   You can get free help preparing your return nationwide from IRS-certified volunteers. The Volunteer Income Tax Assistance (VITA) program helps low-to-moderate income, elderly, people with disabilities, and limited English proficient taxpayers. The Tax Counseling for the Elderly (TCE) program helps taxpayers age 60 and older with their tax returns. Most VITA and TCE sites offer free electronic filing and all volunteers will let you know about credits and deductions you may be entitled to claim. In addition, some VITA and TCE sites provide taxpayers the opportunity to prepare their own return with help from an IRS-certified volunteer. To find the nearest VITA or TCE site, you can use the VITA Locator Tool on IRS.gov, download the IRS2Go app, or call 1-800-906-9887.

  As part of the TCE program, AARP offers the Tax-Aide counseling program. To find the nearest AARP Tax-Aide site, visit AARP's website at www.aarp.org/money/taxaide or call 1-888-227-7669. For more information on these programs, go to IRS.gov and enter “VITA” in the search box.

Internet.    IRS.gov and IRS2Go are ready when you are —24 hours a day, 7 days a week.
  • Download the free IRS2Go app from the iTunes app store or from Google Play. Use it to check your refund status, order transcripts of your tax returns or tax account, watch the IRS YouTube channel, get IRS news as soon as it's released to the public, subscribe to filing season updates or daily tax tips, and follow the IRS Twitter news feed, @IRSnews, to get the latest federal tax news, including information about tax law changes and important IRS programs.

  • Check the status of your 2013 refund with the Where's My Refund? application on IRS.gov or download the IRS2Go app and select the Refund Status option. The IRS issues more than 9 out of 10 refunds in less than 21 days. Using these applications, you can start checking on the status of your return within 24 hours after we receive your e-filed return or 4 weeks after you mail a paper return. You will also be given a personalized refund date as soon as the IRS processes your tax return and approves your refund. The IRS updates Where's My Refund? every 24 hours, usually overnight, so you only need to check once a day.

  • Use the Interactive Tax Assistant (ITA) to research your tax questions. No need to wait on the phone or stand in line. The ITA is available 24 hours a day, 7 days a week, and provides you with a variety of tax information related to general filing topics, deductions, credits, and income. When you reach the response screen, you can print the entire interview and the final response for your records. New subject areas are added on a regular basis. 
    Answers not provided through ITA may be found in Tax Trails, one of the Tax Topics on IRS.gov which contain general individual and business tax information or by searching the IRS Tax Map, which includes an international subject index. You can use the IRS Tax Map, to search publications and instructions by topic or keyword. The IRS Tax Map integrates forms and publications into one research tool and provides single-point access to tax law information by subject. When the user searches the IRS Tax Map, they will be provided with links to related content in existing IRS publications, forms and instructions, questions and answers, and Tax Topics.

  • Coming this filing season, you can immediately view and print for free all 5 types of individual federal tax transcripts (tax returns, tax account, record of account, wage and income statement, and certification of non-filing) using Get Transcript. You can also ask the IRS to mail a return or an account transcript to you. Only the mail option is available by choosing the Tax Records option on the IRS2Go app, by selecting Get Transcript by MAIL on IRS.gov or by calling 1-800-908-9946. Tax return and tax account transcripts are generally available for the current year and the past three years.

  • Determine if you are eligible for the EITC and estimate the amount of the credit with the Earned Income Tax Credit (EITC) Assistant.

  • Visit Understanding Your IRS Notice or Letter to get answers to questions about a notice or letter you received from the IRS.

  • If you received the First Time Homebuyer Credit, you can use the First Time Homebuyer Credit Account Look-up tool for information on your repayments and account balance.

  • Check the status of your amended return using Where's My Amended Return? Go to IRS.gov and enter Where's My Amended Return? in the search box. You can generally expect your amended return to be processed up to 12 weeks from the date we receive it. It can take up to 3 weeks from the date you mailed it to show up in our system.

  • Make a payment using one of several safe and convenient electronic payment options available on IRS.gov. Select the Payments tab on the front page of IRS.gov for more information.

  • Determine if you are eligible and apply for an online payment agreement, if you owe more tax than you can pay today.

  • Figure your income tax withholding with the IRS Withholding Calculator on IRS.gov. Use it if you've had too much or too little withheld, your personal situation has changed, you're starting a new job or you just want to see if you're having the right amount withheld.

  • Determine if you might be subject to the Alternative Minimum Tax by using the Alternative Minimum Tax Assistant on IRS.gov.

  • Request an Electronic Filing PIN by going to IRS.gov and entering Electronic Filing PIN in the search box.

  • Download forms, instructions and publications, including accessible versions for people with disabilities.

  • Locate the nearest Taxpayer Assistance Center (TAC) using the Office Locator tool on IRS.gov, or choose the Stay Connected option on the IRS2Go app, then click Contact Us, then Contact Info, and then search Local Offices. An employee can answer questions about your tax account or help you set up a payment plan. Before you visit, check the Office Locator on IRS.gov, or Local Offices under Contact Info on IRS2Go to confirm the address, phone number, days and hours of operation, and the services provided. If you have a special need, such as a disability, you can request an appointment. Call the local number listed in the Office Locator, or look in the phone book under United States Government, Internal Revenue Service.

  • Apply for an Employer Identification Number (EIN). Go to IRS.gov and enter Apply for an EIN in the search box.

  • Read the Internal Revenue Code, regulations, or other official guidance.

  • Read Internal Revenue Bulletins.

  • Sign up to receive local and national tax news and more by email. Just click on “Subscriptions” above the search box on IRS.gov and choose from a variety of options.

Phone.    You can call the IRS, or you can carry it in your pocket with the IRS2Go app on your smart phone or tablet. Download the free IRS2Go app from the iTunes app store or from Google Play.
  • Call to locate the nearest volunteer help site, 1-800-906-9887 or you can use the VITA Locator Tool on IRS.gov, or download the IRS2Go app. Low-to-moderate income, elderly, people with disabilities, and limited English proficient taxpayers can get free help with their tax return from the nationwide Volunteer Income Tax Assistance (VITA) program. The Tax Counseling for the Elderly (TCE) program helps taxpayers age 60 and older with their tax returns. Most VITA and TCE sites offer free electronic filing. Some VITA and TCE sites provide IRS-certified volunteers who can help prepare your tax return. Through the TCE program, AARP offers the Tax-Aide counseling program; call 1-888-227-7669 to find the nearest Tax-Aide location.

  • Call the automated Where's My Refund? information hotline to check the status of your 2013 refund 24 hours a day, 7 days a week at 1-800-829-1954. If you e-file, you can start checking on the status of your return within 24 hours after the IRS receives your tax return or 4 weeks after you've mailed a paper return. The IRS issues more than 9 out of 10 refunds in less than 21 days. Where's My Refund? will give you a personalized refund date as soon as the IRS processes your tax return and approves your refund. Before you call this automated hotline, have your 2013 tax return handy so you can enter your social security number, your filing status, and the exact whole dollar amount of your refund. The IRS updates Where's My Refund? every 24 hours, usually overnight, so you only need to check once a day. Note, the above information is for our automated hotline. Our live phone and walk-in assistors can research the status of your refund only if it's been 21 days or more since you filed electronically or more than 6 weeks since you mailed your paper return.

  • Call the Amended Return Hotline, 1-866-464-2050, to check the status of your amended return. You can generally expect your amended return to be processed up to 12 weeks from the date we receive it. It can take up to 3 weeks from the date you mailed it to show up in our system.

  • Call 1-800-TAX-FORM (1-800-829-3676) to order current-year forms, instructions, publications, and prior-year forms and instructions (limited to 5 years). You should receive your order within 10 business days.

  • Call TeleTax, 1-800-829-4477, to listen to pre-recorded messages covering general and business tax information. If, between January and April 15, you still have questions about the Form 1040, 1040A, or 1040EZ (like filing requirements, dependents, credits, Schedule D, pensions and IRAs or self-employment taxes), call 1-800-829-1040.

  • Call using TTY/TDD equipment, 1-800-829-4059 to ask tax questions or order forms and publications. The TTY/TDD telephone number is for people who are deaf, hard of hearing, or have a speech disability. These individuals can also contact the IRS through relay services such as the Federal Relay Service.

Walk-in.   You can find a selection of forms, publications and services — in-person.
  • Products. You can walk in to some post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. Some IRS offices, libraries, and city and county government offices have a collection of products available to photocopy from reproducible proofs.

  • Services. You can walk in to your local TAC for face-to-face tax help. An employee can answer questions about your tax account or help you set up a payment plan. Before visiting, use the Office Locator tool on IRS.gov, or choose the Stay Connected option on the IRS2Go app, then click Contact Us, then Contact Info, and then search Local Offices for days and hours of operation, and services provided.

Mail.   You can send your order for forms, instructions, and publications to the address below. You should receive a response within 10 business days after your request is received.

Internal Revenue Service 
1201 N. Mitsubishi Motorway 
Bloomington, IL 61705-6613

 
 
The Taxpayer Advocate Service Is Here to Help You. The Taxpayer Advocate Service (TAS) is your voice at the IRS. Our job is to ensure that every taxpayer is treated fairly and that you know and understand your rights.  
 
What can TAS do for you? We can offer you free help with IRS problems that you can't resolve on your own. We know this process can be confusing, but the worst thing you can do is nothing at all! TAS can help if you can't resolve your tax problem and:
  • Your problem is causing financial difficulties for you, your family, or your business.

  • You face (or your business is facing) an immediate threat of adverse action.

  • You've tried repeatedly to contact the IRS but no one has responded, or the IRS hasn't responded by the date promised.

 
 
If you qualify for our help, you'll be assigned to one advocate who'll be with you at every turn and will do everything possible to resolve your problem. Here's why we can help:
  • TAS is an independent organization within the IRS.

  • Our advocates know how to work with the IRS.

  • Our services are free and tailored to meet your needs.

  • We have offices in every state, the District of Columbia, and Puerto Rico.

 
 
How can you reach us? If you think TAS can help you, call your local advocate, whose number is in your local directory and at www.irs.gov/advocate, or call us toll-free at 1-877-777-4778. 
 
How else does TAS help taxpayers? 
 
TAS also works to resolve large-scale, systemic problems that affect many taxpayers. If you know of one of these broad issues, please report it to us through our www.irs.gov/sams.

Low Income Taxpayer Clinics

Low Income Taxpayer Clinics (LITCs) serve individuals whose income is below a certain level and need to resolve tax problems such as audits, appeals and tax collection disputes. Some clinics can provide information about taxpayer rights and responsibilities in different languages for individuals who speak English as a second language. Visit www.irs.gov/litc or see IRS Publication 4134, Low Income Taxpayer Clinic List.


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