If you are a member of the clergy, you are taxed on offerings and
fees for marriages, baptisms, funerals, and religious services, as
well as on your salary.
The fair rental value of housing furnished to you is not subject to
income tax, nor is a designated rental allowance if it is used to
rent or provide a home. If you do not use all of your allowance to
rent or provide a home, the unused part is subject to income tax.
If you are performing ministerial services as an employee of a
church, your salary will be reported to you on Form W-2. If you
itemize your deductions, you can claim your expenses related to those
services in the same manner as any other employee. You may need to
fill out Form 2106, Employee Business Expenses, and attach it to your
Form 1040. The amount of your expenses should be shown on Schedule A
as a job expense or miscellaneous deduction. This amount is
deductible only to the extent it exceeds 2% of your adjusted gross
income. Refer to Topic 508 for information on this 2% limitation.
You must report offerings and fees you receive for marriages,
baptisms, etc., and their related business deductions, on Schedule C,
Profit or Loss from Business, or on Schedule C-EZ, Net Profit from
Business. Refer to Topic 408 for additional information.
Unless you qualify for exemption, you will be subject to
self-employment tax on the salary reported on your Form W-2, or your
net profit shown on Schedule C or Schedule C-EZ, and the rental
allowance you receive or the fair market value of the housing
furnished to you. Figure your self-employment tax on Schedule SE,
Form 1040.
You may request exemption from self-employment tax on your income
from ministerial services by filing Form 4361. Ministers who apply
for exemption from self-employment tax must be conscientiously
opposed to public insurance because of religious considerations, and
except for Christian Science Practitioners, are required to inform
the ordaining, commissioning, or licensing body of their church that
they are opposed to public insurance. You cannot request exemption
solely for economic reasons.
Special rules apply to members of religious orders who have taken a
vow of poverty.
For more information see Publication 517, Social Security and Other
Information for Members of the Clergy and Religious Workers.
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