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As an ordained minister you may be eligible for a number of tax advantages that you may not be aware of and that are not available to people outside of the ministry. Minister tax benefits were originally instituted to help clergymen as they were originally paid quite poorly. Ministers that are ordained have the option of taking a number of tax deductions and opting out of payments that others are expected to make as long as certain IRS qualifications are met. Here are several such minister tax benefits.

 

Social Security Self-Employment Tax

 

According to IRS:

"With respect to Social Security, ministers of the Gospel are self-employed"

Although ministers of the Gospel should be regarded as employees for federal income tax reporting purposes, they are regarded as self-employed for social security purposes. Accordingly, you will pay the "self employment tax" rather than FICA taxes. Because ministers pay a much higher percentage of social security tax than employees, some employers may offer to pay a portion of it for you. However, this form of relief is considered additional compensation for income tax and self-employment tax purposes.

Exempt from Self-Employment Taxes

A vast majority of employees must pay a portion of their income to Social Security and Medicare; Ministers can opt-out of these. This saves them money on their taxes but they also don’t benefit from these programs later on either (ie.no social security when you retire). And in addition, once a minister has become exempt the IRS does not generally allow a minister to revoke this decision.

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