Qualified services, in general, are the services you perform in the
exercise of your ministry or in the exercise of your duties as
required by your religious order. Income you receive for performing
qualified services is subject to SE tax unless you have an exemption
as explained earlier. If you have an exemption, only the income you
receive for performing qualified services is exempt. The exemption
does not apply to any other SE income.
The following discussions provide more detailed information on
qualified services of ministers, and members of religious orders, and
Christian Science practitioners and readers.
Ministers
Most services you perform as a minister, priest, rabbi, etc., are
qualified services. These services include:
- Performing sacerdotal functions,
- Conducting religious worship, and
- Controlling, conducting, and maintaining religious
organizations, boards, societies, and other integral agencies 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 qualified
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 qualified services only if they involve performing sacerdotal
functions or conducting religious worship.
Services that are not part of your ministry.
Income from services that are not qualified services is generally
subject to social security tax withholding (not self-employment tax)
under the rules that apply to workers in general. The following are
not qualified services.
- Services you perform for nonreligious organizations other
than the services stated earlier.
- 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. This is true 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, the services are not qualified 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.
Books or articles.
Writing religious books or articles is considered to be in the
exercise of your ministry.
This rule also applies to members of religious orders and to
Christian Science practitioners.
Members of
Religious Orders
Services you perform as a member of a religious order in the
exercise of duties required by the order are qualified services. The
services are qualified because you perform them as an agent of the
order.
For example, if you are directed 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 you are directed to work outside the order, the
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 workers in
general, not under the rules for services provided as agent for the
order. This is true even if you have taken a vow of poverty.
Example.
Mark Brown and Elizabeth 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.
Mark is a licensed attorney. The superiors of the order instructed
him to get a job with a law firm. Mark joined a law firm as an
employee and, as he requested, the firm made the salary payments
directly to the order.
Elizabeth is a secretary. The superiors of the order instructed her
to accept a job with the business office of the church that supervises
the order. Elizabeth took the job and gave all her earnings to the
order.
Mark's services are not duties required by the order.
His earnings are subject to social security and Medicare tax under
FICA and Federal income tax.
Elizabeth's services are considered duties required by
the order. She is acting as an agent of the order and not as an
employee of a third party. She does not include the earnings in gross
income, and they are not subject to income tax withholding, social
security and Medicare tax, or SE tax.
Christian Science Practitioners and Readers
The exemption from SE tax, discussed earlier, applies only to the
services a Christian Science practitioner or reader performs in the
exercise of that profession. If you do not have an exemption, amounts
you receive for performing these qualified services are subject to SE
tax.
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