IRS Form 4361 Explained
Table of Contents
Key Takeaways:
- IRS Form 4361, Application for Exemption From Self-Employment Tax for Use by Ministers, Members of Religious Orders and Christian Science Practitioners, is a tax form that can be used by qualifying clergy members who wish to opt out of their responsibility of paying self-employment tax, including Social Security and Medicare tax.
- Ministers may qualify for exemption from self-employment tax if they have received ministerial earnings and are either an ordained, licensed, or commissioned church minister, a Christian Science practitioner, or a member of a religious order who hasn’t taken a vow of poverty.
- Opting out of self-employment taxes as a minister is irreversible.
- IRS Form 4361 must be filed with their federal income tax return by the deadline of April 15 following the second tax year in which they earned $400 of net self-employment earnings that were at least partially earned for ministerial purposes.
What Is IRS Form 4361?
IRS Form 4361, Application for Exemption From Self-Employment Tax for Use by Ministers, Members of Religious Orders and Christian Science Practitioners, is a tax form qualifying individuals can use to apply to be exempt from the responsibility of paying self-employment tax.
Which Taxes Are Eligible For Exemption Using IRS Form 4361?
Ministers who choose to file IRS Form 4361 request to opt out of self-employment tax. Self-employment tax refers to:
- Social Security taxes
- Medicare taxes
- Medicaid taxes
IRS Form 4361 Eligibility Requirements
In order to qualify for exemption from self-employment tax using IRS Form 4361, the individual must have earned money through the ministry, as well as be:
- An ordained, licensed, or commissioned church minister;
- A Christian Science practitioner; or
- A member of a religious order who hasn’t taken a vow of poverty
The IRS is clear about its rules that it is illegal to opt out of paying taxes for economic reasons, so the only reason people can legally gain exemption from self-employment tax is that they are conscientiously opposed to the acceptance of public insurance or opposed to the acceptance of public insurance due to religious principles.
Can Ministers Reverse The Exemption From Self-Employment Tax?
Clergy members who are considering applying for self-employment tax exemption status must understand that once they have opted out from paying self-employment taxes, this action cannot be reversed. This means that the individual will be required to purchase their own benefits, such as health insurance, life insurance, disability insurance, and retirement savings.
When Is IRS Form 4361 Due?
The IRS Form 4361 filing deadline is based on two tax years during which the minister met the qualifications, even if these calendar years are not consecutive. Aside from receiving extensions, ministers will be required to file IRS Form 4361 by April 15, the same day their tax return is due to be filed.
Therefore, IRS Form 4361 must be filed at the same time as their tax return following the second tax year in which they earned $400 of net self-employment earnings that were at least partially earned for ministerial purposes.
How To Fill Out IRS Form 4361
Ministers who wish to opt out of self-employment taxes must complete IRS Form 4361 by following the instructions to provide the following information in the appropriate sections.
Part 1:
- Name
- Mailing address and ZIP code
- Social security number
Part 2:
- Whether they are a Christian Science practitioner, an ordained minister, priest, or rabbi, a member of a religious order not under a vow of poverty, or a commissioned or licensed minister
Part 3:
- The date they were ordained, commissioned, or licensed
Part 4:
- The legal name of the church or religious body that ordained, commissioned, or licensed them
- The mailing address and ZIP code of the religious body
- The employer identification number of the religious body
Part 5:
- The first two years after the date they were ordained, commissioned, or licensed, during which the individual earned $400 or more in self-employed income working as a member of a religious order.
Part 6:
- For licensed or commissioned ministers, as indicated in part 2, input how their ecclesiastical powers differ from those of an ordained minister of their denomination, as well as attach a copy of their denomination’s bylaws
Part 7:
- Sign and date to certify the intention to opt out of self-employment taxes.
After filing the tax form with the IRS, an IRS agent will review their application and confirm the approval or denial of their request to be exempt from self-employment tax on ministerial earnings.
If you are unsure about whether you should opt out of self-employment taxes on your ministerial earnings, consulting with a tax professional to gain personalized tax advice about your situation is a beneficial strategy for long-term savings.
Schedule a free consultation with the tax professionals at Ideal Tax, a tax debt relief organization that is dedicated to providing the most valuable customized tax services.
Luis serves as the Director of Operations for Ideal Tax, overseeing a multifaceted team including case management, tax professionals, document specialists, customer support, training, and development.
