What is IRS Publication 517?
IRS Publication 517: Social Security and Other Information for Clergy and Religious Workers is a document published each year by the Internal Revenue Service that details the ways in which those who work or provide services for religious organizations and orders must submit their income. , Social Security and Medicare taxes. As religious employees, these taxpayers receive certain tax benefits and modifications to customary tax rules.
- IRS Publication 517 provides tax information for those who are members of the clergy or other religious workers.
- Publication 517 details the ways that those who work or provide services for religious organizations and orders must file their income taxes, Social Security, and Medicare.
- With respect to Social Security and Medicare, Publication 517 indicates which forms of income are payable under the Self Employed Contributions Act (SECA) system or the Federal Insurance Contributions Act (FICA) system.
- Publication 517 also tells how to calculate taxable earnings and how to apply for tax exemptions.
Understanding IRS Publication 517
IRS Publication 517: Social Security and Other Information for Clergy and Religious Workers outlines and updates the income tax and Social Security / Medicare tax rules for those who serve in a ministerial capacity, are members of orders, or recognized religious sects, or are some other type of employee of a religious organization. Regulations regarding Social Security taxes and Medicare in particular can be complex.
These two taxes are collected through the Self-Employment Contributions Act (SECA) system or the Federal Insurance Contributions Act (FICA) system. IRS Publication 517 helps determine which forms of income are subject to SECA and which are subject to FICA rules.
As of 2017, according to the SECA, the self-employed who qualifies for this category is responsible for paying all of their own taxes. Under FICA, the employer and employee are each responsible for half of the taxes owed to Social Security and Medicare. All clergy or religious workers will be subject to one of these systems, but not both.
Additionally, as of 2020, wages and earnings from self-employment for clergy and religious workers are also subject to an additional Medicare tax of 0.09% if it exceeds a certain amount. Form 8959 is used to calculate the supplemental tax due.
Who is affected by IRS Publication 517?
IRS Publication 517 applies to various ministerial categories. This is how the FICA / SECA rules are broken down for those who perform ministerial or religious services.
Religious services, in general, are services performed in the exercise of a ministry, in the duties required by a religious order, or in the exercise of the role of a person as a practitioner or professional reader of Christian Science.
- Ministers they are generally covered by SECA, as long as they do not have an IRS-approved exemption. These ministerial incomes are exempt under FICA.
- Members of a religious order who have not taken a vow of poverty they are generally covered by SECA, as long as they do not have an IRS-approved exemption. These ministerial incomes are exempt under FICA.
- Members of a religious order who have taken a vow of poverty they are generally covered by FICA if the order has elected FICA coverage and the person worked outside of the order but was not required to do so. These ministerial earnings are exempt under SECA.
- Religious workers or church employees it may be covered by FICA or SECA, depending on the category the employer chooses to follow.
- Members of a recognized religious sect they may be covered under FICA if they are employed without an IRS approved exemption, or under SECA if they are self-employed and do not have an IRS approved exemption.
- Practitioners or Readers of Christian Science They are generally covered by the SECA if they do not have an approved exemption from the IRS. These ministerial incomes are exempt under FICA.
In addition to indicating which and whose earnings are taxed under which system, Publication 517 also outlines how members of the clergy or religious sects calculate net earnings from self-employment and how to apply for FICA and self-employment tax exemptions. .
Download IRS Publication 517 here
Like most IRS publications and forms, Publication 517 can be downloaded in PDF format from the official IRS website.
As with many IRS regulations, various provisions of Publication 517 change from year to year, so it is imperative that everyone affected by this section of the tax code always consult the latest version. The website also provides the latest information and developments related to standards in IRS.gov/Pub517.