Publication 517: Social Security and Other Information for Members of the Clergy and Religious Workers; Publication 517 Introductory Material

This is archived information that pertains only to the 2003 Tax Year. If you
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Table of Contents

Important Changes for 2002

Members of recognized religious sects. Beginning in 2002, self-employed members of recognized religious sects who are exempt from self-employment tax may be eligible to participate in SEP, SIMPLE, or Keogh retirement plans. For more information, see Publication 560, Retirement Plans for Small Business.

Earned income credit. Beginning in 2002, the following changes take effect.

Earned income no longer includes employee compensation that is nontaxable.
Your earned income credit is figured using your adjusted gross income, not your modified adjusted gross income.

For other changes to the earned income credit, see Publication 596.

Increased contribution limits for traditional IRAs and Roth IRAs. For 2002, allowable contributions to a traditional IRA and a Roth IRA will be increased to $3,000 ($3,500 if age 50 or over). In prior years, contributions were limited to $2,000. For more information, see Retirement Savings Arrangements, later.

Increased self-employed health insurance deduction. In 2002, the self-employed health insurance deduction increases from 60% (in 2001) to 70% of the cost of the insurance. For more information, see Health Insurance Costs of Self-Employed Ministers, later under Income Tax: Income and Expenses.

Retirement savings contributions. Beginning in 2002, you may be able to take a tax credit for certain contributions you make to a retirement plan or an individual retirement arrangement. For more information, see Retirement savings contributions credit, later, under Retirement Savings Arrangements.

Important Change for 2003

Increased self-employed health insurance deduction. In 2003, the self-employed health insurance deduction will increase to 100% of the cost of the insurance.

Important Reminder

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.

Introduction

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?
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 this exemption.*
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 this exemption.	YES, if you are self-employed and do not have an approved exemption from the IRS. NO, if you have this 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.*
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 this exemption.*
Minister	NO. You are exempt.*	YES, if you do not have an approved exemption from the IRS. NO, if you have this exemption.*
Religious worker (church employee)	NO, if your employer elected not to have you covered.	YES, if your employer elected not to have you covered under FICA. NO, if you are covered under FICA.

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

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?
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 this exemption.*
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 this exemption.	YES, if you are self-employed and do not have an approved exemption from the IRS. NO, if you have this 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.*
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 this exemption.*
Minister	NO. You are exempt.*	YES, if you do not have an approved exemption from the IRS. NO, if you have this exemption.*
Religious worker (church employee)	NO, if your employer elected not to have you covered.	YES, if your employer elected not to have you covered under FICA. NO, if you are covered under FICA.

* 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.

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.

Comments and suggestions.

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

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Internal Revenue Service
Tax Forms and Publications
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1111 Constitution Ave. NW
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.

Publication 517
Introductory Material

Important Changes for 2002

Important Change for 2003

Important Reminder

Introduction

Note.

Useful Items - You may want to see:

Publication 517Introductory Material

Important Changes for 2002

Important Change for 2003

Important Reminder

Introduction

Note.

Useful Items - You may want to see:

Publication 517
Introductory Material