IRS Publication 517
IRS Publication 517: Social Security and Other Information for Members of the Clergy and Religious Workers delineates and updates the income tax and Social Security/Medicare tax rules for those who serve in a ministerial capacity, are members of recognized religious orders or sects, or are some other sort of religious organization employee. **Members of a recognized religious sect** can be covered under FICA if they are an employee without an approved exemption from the IRS, or under SECA if they are self-employed and do not have an approved exemption from the IRS. **Christian Scientist practitioners or readers** are typically covered under SECA if they do not have an approved exemption from the IRS. IRS Publication 517: Social Security and Other Information for Members of the Clergy and Religious Workers is a document published each year by the Internal Revenue Service detailing the ways that those who work in or perform services for religious organizations and orders are required to file their income, Social Security and Medicare taxes. In regards to Social Security and Medicare, Publication 517 indicates which forms of income are payable under the Self-Employment Contributions Act (SECA) system or the Federal Insurance Contributions Act (FICA) system.
What Is IRS Publication 517?
IRS Publication 517: Social Security and Other Information for Members of the Clergy and Religious Workers is a document published each year by the Internal Revenue Service detailing the ways that those who work in or perform services for religious organizations and orders are required to file their income, Social Security and Medicare taxes. As religious employees, these taxpayers are provided with certain tax benefits and modifications of the usual tax rules.
Understanding IRS Publication 517
IRS Publication 517: Social Security and Other Information for Members of the Clergy and Religious Workers delineates and updates the income tax and Social Security/Medicare tax rules for those who serve in a ministerial capacity, are members of recognized religious orders or sects, or are some other sort of religious organization employee. The regulations regarding Social Security and Medicare taxes in particular can be complex.
These two taxes are collected through either the Self-Employment Contributions Act (SECA) system or the Federal Insurance Contributions Act (FICA) system. IRS Publication 517 helps to determine which forms of income are subject to SECA, and which are subject to FICA rules.
As of 2017, under SECA, the self-employed individual qualifying for this category is responsible for paying all of their own taxes. Under FICA, the employer and the employee are each responsible for half of the taxes due to Social Security and Medicare. All clergy or religious workers will be subject to one of these systems, but not both.
In addition, as of 2020, wages and self-employment income for clergy and religious workers are also subject to a 0.09% Additional Medicare Tax if it exceeds a certain amount. Form 8959 is used to figure the supplemental tax owed.
Who Is Affected by IRS Publication 517?
IRS Publication 517 applies to several ministerial categories. Here's how the FICA/SECA rules break down for those performing ministerial or religious services.
Religious services, in general, are the services performed in the exercise of a ministry, in duties required by a religious order, or in the exercise of a person's role as a professional Christian Science practitioner or reader.
Along with indicating which and whose earnings are taxed under which system, Publication 517 also delineates how members of the clergy or religious sects figure net self-employment earnings, and how to apply for exemptions from self-employment and FICA taxes.
Download IRS Publication 517 Here
Like most IRS publications and forms, Publication 517 can be downloaded in PDF form from the IRS' official website.
As with many IRS regulations, various stipulations of Publication 517 change from year to year, so it is imperative that all those affected by this section of the tax code always refer to the latest version. The website also furnishes the latest information and developments relating to the regs at IRS.gov/Pub517.
Related terms:
Federal Insurance Contributions Act (FICA)
The Federal Insurance Contributions Act (FICA) is a U.S payroll tax deducted to fund the Social Security and Medicare programs. read more
Income Tax
Income tax is a tax that governments impose on income generated by businesses and individuals within their jurisdiction. read more
Independent Contractor
An independent contractor is a person or entity engaged in a work performance agreement with another entity as a non-employee. read more
What Is the Internal Revenue Service (IRS)?
The Internal Revenue Service (IRS) is the U.S. federal agency that oversees the collection of taxes—primarily income taxes—and the enforcement of tax laws. read more
Medicare
Medicare is a U.S. government program providing healthcare insurance to individuals 65 and older or those under 65 who meet eligibility requirements. read more
Parsonage Allowance
A parsonage allowance is a tax-deductible sum awarded by the governing board of a house of worship to its minister to cover the cost of housing. read more
Payroll
Payroll is the compensation a business must pay to its employees for a set period or on a given date. Read about payroll accounting here. read more
Self-Employed Contributions Act (SECA) Tax
The Self-Employed Contributions Act (SECA) tax is a U.S. government levy on those who work for themselves, rather than for an outside company. read more
Self-Employment
A self-employed individual does not work for a specific employer who pays them a consistent salary or wage. read more
Social Security Act
The Social Security Act established a benefits system for people who are retired, jobless, or have a disability. A payroll tax funds these benefits. read more