1996 Tax Help Archives  

Earnings For Clergy

This is archived information that pertains only to the 1996 Tax Year. If you
are looking for information for the current tax year, go to the Tax Prep Help Area.

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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