Special rules apply to the treatment of ministers for socialsecurity purposes. An exemption from social security is available forministers and certain other religious workers and members of certainrecognized religious sects. For more information on getting anexemption, see Pub. 517, Social Security and OtherInformation for Members of the Clergy and Religious Workers. Ministers.Ministers are individuals who are duly ordained, commissioned, orlicensed by a religious body constituting a church or churchdenomination. They are given the authority to conduct religiousworship, perform sacerdotal functions, and administer ordinances andsacraments according to the prescribed tenets and practices of thatreligious organization. A minister who performs services for you subject to your will andcontrol is your employee. The common-law rules discussed in sections 1and 2 should be applied to determine whether a minister is youremployee or is self-employed. The earnings of a minister are notsubject to income, social security, and Medicare tax withholding. Theyare subject to self-employment tax and income tax. You do not withholdthese taxes from wages earned by a minister. However, you may agreewith the minister to voluntarily withhold tax to cover the minister'sliability for self-employment tax and income tax. Form W-2.If your employee is an ordained minister, report all taxablecompensation as wages in box 1 on Form W-2. Include in this amountexpense allowances or reimbursements paid under a nonaccountable plan,discussed in section 5 of Circular E. Do not include a parsonageallowance (excludable housing allowance) in this amount. You mayreport a parsonage or rental allowance (housing allowance), utilitiesallowance, and the rental value of housing provided in a separatestatement or as in box 14 on Form W-2. Do not show on Form W-2 or 941any amount as social security or Medicare wages, or any withholdingfor social security or Medicare taxes. If you withheld tax from theminister under a voluntary agreement, this amount should be shown inbox 2 on Form W-2 as Federal income tax withheld. For more informationon ministers, see Pub. 517. Exemptions for ministers and others.Certain ordained ministers, Christian Science practitioners, andmembers of religious orders who have not taken a vow of poverty, whoare subject to self-employment tax, may apply to exempt their earningsfrom the tax on religious grounds. The application must be based onconscientious opposition to public insurance because of personalreligious considerations. The exemption applies only to qualifiedservices performed for the religious organization. See Rev. Proc.91-20, 1991-1 C.B. 524, for guidelines to determine whether anorganization is a religious order or whether an individual is a memberof a religious order. To apply for the exemption, the employee should file Form4361, Application for Exemption From Self-Employment Tax for Useby Ministers, Members of Religious Orders and Christian SciencePractitioners. See Pub. 517 for more information about Form 4361. Members of recognized religious sects opposed to insurance.If you belong to a recognized religious sect or a division of suchsect that is opposed to insurance, you may qualify for an exemptionfrom the self-employment tax. To qualify, you must be conscientiouslyopposed to accepting the benefits of any public or private insurancethat makes payments because of death, disability, old age, orretirement, or makes payments toward the cost of, or provides servicesfor, medical care (including social security and Medicare benefits).If you buy a retirement annuity from an insurance company, you willnot be eligible for this exemption. Religious opposition based on theteachings of the sect is the only legal basis for the exemption. Inaddition, your religious sect (or division) must have existed sinceDecember 31, 1950. Self-employed.If you are self-employed and a member of a recognized religioussect opposed to insurance, you can apply for exemption by filingForm 4029, Application for Exemption From Social Securityand Medicare Taxes and Waiver of Benefits, and waive all socialsecurity benefits. Employees.The social security and Medicare tax exemption available to theself-employed who are members of a recognized religious sect opposedto insurance is also available to their employees who are members ofsuch a sect. This applies to partnerships only if each partner is amember of the sect. This exemption for employees applies only if boththe employee and the employer are members of such a sect, and theemployer has an exemption. To get the exemption, the employee mustfile Form 4029. An employee of a church or church-controlled organization that isexempt from social security and Medicare taxes can also apply for anexemption on Form 4029. | 
