Exemption From Self-Employment (SE) Tax Members of religious orders who have not taken a vow of poverty,ministers, and Christian Science practitioners can request anexemption from SE tax. Members of a recognized religious sect or a division of it can alsoapply for an exemption from the SE tax. For the rules that apply tothis exemption, see Members of Recognized Religious Sects,later. TaxTip: Members of religious orders who have taken a vow of poverty areexempt from paying SE tax, as discussed earlier under Members ofReligious Orders. They do not have to request the exemption. Who cannot be exempt?If you elected before 1968 to be covered under social security foryour ministerial services, you are still covered. You cannot be exemptfrom SE tax. If you elected to be covered by social security by filing Form 2031for your 1986 or 1987 tax year, you cannot be exempt from SE tax. Requesting exemption.Table 1 briefly summarizes the procedure for requestingexemption from the SE tax. More detailed explanations follow. Caution: An approved exemption only applies to earnings you receive forqualified services, discussed later. It does not apply to any other SEincome. Ministers, Members of Religious Orders, and Christian SciencePractitioners To claim the exemption from SE tax, you must meet all of thefollowing conditions. You file Form 4361, described later under Requestingexemption -- Form 4361. You are conscientiously opposed to public insurance becauseof your individual religious considerations (not because of yourgeneral conscience), or be opposed because of the principles of yourreligious denomination. You file for other than economic reasons. You inform the ordaining, commissioning, or licensing bodyof your church or order that you are opposed to public insurance ifyou are a minister or a member of a religious order (other than avow-of-poverty member). This requirement does not apply toChristian Science practitioners. You establish that the organization that ordained,commissioned, or licensed you, or your religious order, is atax-exempt religious organization. You establish that the organization is a church or aconvention or association of churches. You sign and return the statement the IRS mails to you tocertify that you are requesting an exemption based on the groundslisted on the statement. Requesting exemption-- Form 4361.To request exemption from SE tax, file Form 4361 in triplicate. Files: The IRS will return to you a copy of the Form 4361 that you filedindicating whether your exemption has been approved. If it isapproved, keep the approved copy in your permanent records. When to file.File Form 4361 by the date your income tax return is due, includingextensions, for the second tax year in which you have net earningsfrom self-employment of at least $400. This rule applies if any partof your net earnings for each of the two years came from your servicesas a: Minister, Member of a religious order, or Christian Science practitioner. The two years do not have to be consecutive tax years. TaxTip: Because the approval process can take some time, you should fileForm 4361 as soon as possible. Example 1.Rev. Lawrence Jaeger, a clergyman ordained in 1999, has netearnings of $450 in 1999 and $500 in 2000. He must file hisapplication for exemption by the due date, including extensions, forhis 2000 income tax return. However, if Rev. Jaeger does not receivehis exemption by April 17, 2000, his SE tax for 1999 is due by thatdate. Example 2.Rev. Louise Wolfe has $300 in net earnings as a minister in 1999,but earned more than $400 in both 1998 and 2000. She must file herapplication for exemption by the due date, including extensions, forher 2000 income tax return. However, if she did not receive theexemption by April 15, 1999, her SE tax for 1998 was due by that date. Example 3.In 1997, Rev. David Moss was ordained a minister and had $700 innet earnings as a minister. In 1998, he received $1,000 as a minister,but his related expenses were over $1,000. Therefore, he had no netearnings as a minister in 1998. Also in 1998, he opened a book storeand had $8,000 in net self-employment earnings from the store. In1999, he had net earnings of $1,500 as a minister and $10,000 net SEearnings from the store. Because Rev. Moss had net earnings from self-employment in 1997 and1999 that were $400 or more each year, and part of the earnings ineach of those years was for his services as a minister, he must filehis application for exemption by the due date, including extensions,for his 1999 income tax return. albergo di qualita ZakopaneDeath of individual.The right to file an application for exemption ends with anindividual's death. A surviving spouse, executor, or administratorcannot file an exemption application for a deceased clergy member. Effective date of exemption.An approved exemption is effective for all tax years after 1967 inwhich you have $400 or more of net earnings from self-employment andany part of the earnings is for services as a member of the clergy.Once the exemption is approved, it is irrevocable. Example.Rev. Trudy Austin, ordained in 1998, had $400 or more in netearnings as a minister in both 1998 and 1999. She files an applicationfor exemption on February 15, 2000. If an exemption is granted, it iseffective for 1998 and the following years. Refunds of SE tax.If, after receiving an approved Form 4361, you find that youoverpaid SE tax, you can file a claim for refund on Form 1040X beforethe period of limitations ends. This is generally within 3 years fromthe date you filed the return or within 2 years from the date you paidthe tax, whichever is later. A return you filed, or tax you paid,before the due date is considered to have been filed or paid on thedue date. If you file a claim after the 3-year period but within 2 years fromthe time you paid the tax, the credit or refund will not be more thanthe tax you paid within the 2 years immediately before you file theclaim. Members of Recognized Religious Sects If you are a member of a recognized religious sect, or a divisionof a recognized religious sect, you can apply for an exemption frompayment of social security and Medicare taxes. Exception.If you received social security benefits or payments, or anyoneelse received these benefits or payments based on your wages or SEincome, you cannot apply. However, if you pay your benefits back, youmay be considered for exemption. Contact your local Social Securityoffice to find out the amount to be paid back. Eligibility requirements.To claim this exemption from SE tax, alldiscount hotels in Portimaro the followingrequirements must be met. You must file Form 4029, discussed later underRequesting exemption -- Form 4029. As a follower of the established teachings of the sect ordivision, you must be conscientiously opposed to accepting benefits ofany private or public insurance that makes payments for death,disability, old age, retirement, or medical care, or provides servicesfor medical care. You must waive all rights to receive any social securitypayment or benefit and agree that no benefits or payments will be madeto anyone else based on your wages and SE income. The Commissioner of Social Security must determine that: Your sect or division has the established teachings as in(2) above, It is the practice, and has been for a substantial period oftime, for members of the sect or division to provide for theirdependent members in a manner that is reasonable in view of themembers' general level of living, and The sect or division has existed at all times since December31, 1950. If you have previously received approval for exemption from SE tax,you are considered to have met the requirements and do not need toapply for this exemption. Requesting exemption -- Form 4029.To request the exemption, file Form 4029 in triplicate with theSocial Security Administration at the address shown on the form. Thesect or division must complete part of the form. Files: The IRS will return to you a copy of the Form 4029 that you filedindicating whether your exemption has been approved. If it isapproved, keep the approved copy in your permanent records. When to file.You can file Form 4029 at any time. Effective date of exemption.An approved exemption generally is effective on the first day ofthe first quarter after the quarter in which Form 4029 is filed. Itdoes not apply to any tax year beginning before you meet theeligibility requirements discussed earlier. The exemption will end if you fail to meet the eligibilityrequirements or if the Commissioner of Social Security determines thatthe sect or division fails to meet them. You must notify the IRSwithin 60 days if you are no longer a member of the religious group,or if you no longer follow the established teachings of this group.The exemption will end on the date you notify the IRS. Refunds of SE tax paid.For information on requesting refunds, see Ministers, Membersof Religious Orders, and Christian Science Practitioners,earlier. Exemption From FICA Taxes Generally, under FICA, the employer and the employee each pay halfof the social security and Medicare tax. Both the employee and theemployer, if they meet the eligibility requirements discussed earlier,can apply to be exempt from their share of FICA taxes on wages paid bythe employer to the employee. TaxTip: If the employers application is approved, the exemption will applyonly to FICA taxes on wages paid to employees who also received anapproval of identical applications. Information for employers.If you have an approved Form 4029 and you have an employee who hasan approved Form 4029, do not report wages you paid to the employee associal security and Medicare wages. A partnership in which each partner holds a religious exemptionfrom social security and Medicare is an employer for this purpose. Form W-2.When preparing a Form W-2 for an employee with an approvedForm 4029, write "Form 4029" in the box marked "Other." Donot make any entries in box 3, 4, 5, or 6. Leuven hotelsForms 941 and 943.Do not include these exempt wages on Form 941, Employer'sQuarterly Federal Tax Return, or on Form 943, Employer'sAnnual Tax Return for Agricultural Employees, if you havereceived an approved Form 4029. On Form 941, write "Form 4029" to the left of the entry spaceson the lines for "Taxable social security wages,""Taxablesocial security tips," and "Taxable Medicare wages and tips."Check the box on line 8 to show that the wages are not subject tothese taxes. On Form 943, write "Form 4029" to the left of the entry spaceson the lines for "Total wages subject to social security taxes,"and "Total wages subject to Medicare taxes." If you have employees who do not have an approved Form 4029, youmust withhold the employee's share of social security and Medicaretaxes and pay the employers share. Effective date.An approved exemption from FICA becomes effective on the first dayof the first calendar quarter after the quarter in which Form 4029 isfiled. The exemption will end on the last day of the calendar quarterbefore the quarter in which the employer, employee, sect, or divisionfails to meet the requirements.