Ministers are duly ordained, commissioned or licensed by a religious body.

AND

• They are performing ministerial duties. In general, ministerial duties are defined by the following:

  • the performance of sacerdotal functions;

  • conducting religious worship

  • administering religious organizations

  • teaching at theological seminaries

• If licensed or commissioned only, they must have the authority to perform "substantially all" the religious functions of an ordained minister. (marriages, funerals, baptisms, communion, preaching & be considered a spiritual leader by his or her religious body)

Ministers have a dual tax status

• They are considered "employees' for income tax purposes (Issue Form W-2)

• They are considered "self-employed" for the purposes of Social Security & Medicare. 

• They pay SECA (self-employed tax) rather than the employee's share of Social Security and Medicare.

• Ministers can request an exemption from SE tax by filing Form 4361 in triplicate in a timely manner.

• Wages paid for ministerial services are exempt from mandatory income tax withholding. 

• However, ministers are not exempt from paying federal income taxes. They must prepay their income taxes using the estimated tax reporting procedure.

• Ministers may choose to do this by entering into a voluntary withholding agreement with the church by completing a W-4 Form.

•  See IRS Publication 517 for additional information.