Not all ministers are treated as self-employed for social security purposes, but many are. The treatment of ministers for social security purposes depends on several factors, including the nature of their services and any exemptions they may have claimed.
- General Rule for Ministers: According to the information provided, ministers' earnings for services performed in their capacity as ministers are generally subject to self-employment tax under the Self-Employment Contributions Act (SECA). This applies even if they perform these services as employees of a church. This means that ministers are typically responsible for paying self-employment tax on their net earnings from self-employment, rather than having social security and Medicare taxes withheld from their wages as employees under the Federal Insurance Contributions Act (FICA).
- Definition of Ministers: Ministers are defined as individuals who are duly ordained, commissioned, or licensed by a religious body constituting a church or church denomination. They have the authority to conduct religious worship, perform sacerdotal functions, and administer ordinances or sacraments according to the prescribed tenets and practices of their church or denomination.
- Exemptions from Self-Employment Tax: There are specific exemptions available for ministers from self-employment tax:
- Conscientious or Religious Opposition: Ministers who are conscientiously opposed to, or opposed on religious principles to, the acceptance of public insurance (including social security) can file for an exemption from self-employment tax. This requires filing an application (Form 4361) and a statement of opposition.
- Members of Religious Orders: Members of religious orders who have taken a vow of poverty are exempt from self-employment tax on their ministerial earnings.
- International Social Security Agreements: Ministers who are covered by social security systems of other countries under international agreements may also be exempt from U.S. self-employment tax.
- Special Rules for Church Employees: There are special rules for certain church employees. For example, church employee income is not reduced by any deductions and is not taken into account in determining other net earnings from self-employment.
- Historical Context and Waivers: Historically, ministers could elect to have social security coverage extended to their ministerial services by filing a waiver certificate (Form 2031). This was particularly relevant for coverage under the Self-Employment Contributions Act of 1954.
In summary, while the default rule is that ministers are treated as self-employed for social security purposes and must pay self-employment tax on their earnings, there are notable exceptions and exemptions that can alter this treatment.
Sources:
Publication 517 (2023)
§ 1402. Definitions
Rev. Rul. 56-187
Rev. Rul. 77-87
PLR 9129037
Rev. Rul. 57-139
