Publication 517 |
2008 Tax Year |
Publication 517 - Introductory Material
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.
Photographs of missing children. The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Photographs of
missing children
selected by the Center may appear in this publication on pages that would otherwise be blank. You can help bring these children
home by looking at the
photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child.
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.
Note.
In this publication, the term “church” is generally used in its generic sense and not in reference to any particular religion.
Comments and suggestions.
We welcome your comments about this publication and your suggestions for future editions.
You can write to us at the following address:
Internal Revenue Service
Individual 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
*[email protected]. (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.
Useful Items - You may want to see:
Publication
-
54
Tax Guide for U.S. Citizens and Resident Aliens Abroad
-
525
Taxable and Nontaxable Income
-
529
Miscellaneous Deductions
-
535
Business Expenses
-
590
Individual Retirement Arrangements (IRAs)
-
596
Earned Income Credit (EIC)
Form (and Instructions)
-
SS-8
Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding
-
SS-16
Certificate of Election of Coverage Under the Federal Insurance Contributions Act
-
Schedule SE (Form 1040)
Self-Employment Tax
-
1040-ES
Estimated Tax for Individuals
-
1040X
Amended U.S. Individual Income Tax Return
-
4029
Application for Exemption From Social Security and Medicare Taxes and Waiver of Benefits
-
4361
Application for Exemption From Self-Employment Tax for Use by Ministers, Members of Religious Orders and Christian Science
Practitioners
-
8274
Certification by Churches and Qualified Church-Controlled Organizations Electing Exemption From Employer Social Security and
Medicare
Taxes
Ordering publications and forms.
See How To Get Tax Help, near the end of this publication, for information about getting these publications and forms.
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