Publication 517 (2007), Social Security and Other Information for Members of the Clergy and Religious Workers

Increased earnings subject to social security. For 2007, the maximum wages and self-employment income subject to social security tax (6.2%) is increased to $97,500. All wages and self-employment income are subject to Medicare tax (1.45%).

Modified AGI limit for retirement savings contribution credit increased. For 2007, you may be able to claim the retirement savings contribution credit if your modified adjusted gross income (AGI) is not more than:

$52,000 if your filing status is married filing jointly,
$39,000 if your filing status is head of household, or
$26,000 if your filing status is single, married filing separately, or qualifying widow(er).

See Publication 590, Individual Retirement Arrangements (IRAs), for more information.

Modified AGI limit for traditional IRA contributions increased. For 2007, you may be able to take an IRA deduction if you were covered by a retirement plan at work and your modified AGI is:

Less than $103,000 if married filing jointly or qualifying widow(er), or
Less than $62,000 if single or head of household.

If you file a joint return and either you or your spouse was not covered by a retirement plan at work, you may be able to take an IRA deduction if your modified AGI is less than $166,000.

Modified AGI limit for Roth IRA contributions increased. For 2007, you may be able to contribute to your Roth IRA if your modified AGI is:

Less than $166,000 if married filing jointly or qualifying widow(er), or
Less than $114,000 if single, head of household, or married filing separately and did not live with your spouse at any time during the year.

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Social security and Medicare taxes are collected under two systems. Under the Self-Employment Contributions Act (SECA), the self-employed person pays all the taxes. Under the Federal Insurance Contributions Act (FICA), the employee and the employer each pay half of the taxes. No earnings are subject to both systems.

Table 1. Are You Covered Under FICA or SECA?

Find your occupation in the left column and read across the table to find if you are covered under FICA or SECA. Do not rely on this table alone. Also read the discussion for your occupation in the following pages.

Occupation	Covered under FICA?	Covered under SECA?
Minister	NO. You are exempt.*	YES, if you do not have an approved exemption from the IRS. NO, if you have an approved exemption.*
Member of a religious order who has not taken a vow of poverty	NO. You are exempt.*	YES, if you do not have an approved exemption from the IRS. NO, if you have an approved exemption.*
Member of a religious order who has taken a vow of poverty	YES, if: Your order elected FICA coverage for its members, or You worked outside the order and the work was not required by, or done on behalf of, the order. NO, if neither of the above applies.*	NO. You are exempt.*
Christian Science practitioner or reader	NO. You are exempt.*	YES, if you do not have an approved exemption from the IRS. NO, if you have an approved exemption.*
Religious worker (church employee)	YES, if your employer did not elect to exclude you. NO, if your employer elected to exclude you.	YES, if your employer elected to exclude you from FICA. NO, if you are covered under FICA.
Member of a recognized religious sect	YES, if you are an employee and do not have an approved exemption from the IRS. NO, if you have an approved exemption.	YES, if you are self-employed and do not have an approved exemption from the IRS. NO, if you have an approved exemption.

* The exemption applies only to qualified services, as defined later under Qualified Services.

This publication covers the following topics about the collection of social security and Medicare taxes from members of the clergy and religious workers.

Which earnings are taxed under FICA and which under SECA. (See Table 1 to determine whether FICA or SECA applies.)
How a member of the clergy (minister, member of a religious order, or Christian Science practitioner) can apply for an exemption from self-employment tax.
How to figure net earnings from self-employment.

This publication also covers certain income tax rules of interest to the clergy.

A comprehensive example shows filled-in forms for a minister who has income taxed under SECA, other income taxed under FICA, and income tax reporting of items specific to the clergy.

In the back of Publication 517 is a set of worksheets that you can use to figure the amount of your taxable ministerial income and allowable deductions. You will find these worksheets right after the Comprehensive Example.

In this publication, the term “church” is generally used in its generic sense and not in reference to any particular religion.

Comments and suggestions. We welcome your comments about this publication and your suggestions for future editions.

You can write to us at the following address:

Internal Revenue Service
Individual Forms and Publications Branch
SE:W:CAR:MP:T:I
1111 Constitution Ave. NW, IR-6526
Washington, DC 20224

We respond to many letters by telephone. Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence.

You can email us at *taxforms@irs.gov. (The asterisk must be included in the address.) Please put “Publications Comment” on the subject line. Although we cannot respond individually to each email, we do appreciate your feedback and will consider your comments as we revise our tax products.

Ordering forms and publications. Visit www.irs.gov/formspubs to download forms and publications, call 1-800-829-3676, or write to the address below and receive a response within 10 days after your request is received.

National Distribution Center
P.O. Box 8903
Bloomington, IL 61702-8903

Tax questions. If you have a tax question, check the information available on www.irs.gov or call 1-800-829-1040. We cannot answer tax questions sent to either of the above addresses.

Publication

54 Tax Guide for U.S. Citizens and Resident Aliens Abroad
525 Taxable and Nontaxable Income
529 Miscellaneous Deductions
535 Business Expenses
590 Individual Retirement Arrangements (IRAs)
596 Earned Income Credit (EIC)

Form (and Instructions)

SS-8
Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding
SS-16
Certificate of Election of Coverage Under the Federal Insurance Contributions Act
Schedule SE (Form 1040)
Self-Employment Tax
1040-ES
Estimated Tax for Individuals
1040X
Amended U.S. Individual Income Tax Return
4029
Application for Exemption From Social Security and Medicare Taxes and Waiver of Benefits
4361
Application for Exemption From Self-Employment Tax for Use by Ministers, Members of Religious Orders and Christian Science Practitioners
8274
Certification by Churches and Qualified Church-Controlled Organizations Electing Exemption From Employer Social Security and Medicare Taxes

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

Publication 517 - Introductory Material

What's New

Reminder

Introduction

Note.

Useful Items - You may want to see: