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Should I opt out of Social Security and Medicare tax as a Minister?

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Can I “opt out” of paying SECA tax on my ministerial income? 


    Maybe. But it’s rarely a good idea. To apply for exemption, ministers within their first two years of employment file federal Form 4361. It involves agreeing with a conscientious objection that for purposes of your ministerial income (and only your ministerial income) you are opposed to the government taking responsibility for your financial protection “in the event of death, disability, old age, or retirement” when you believe it is the responsibility of your church or Christian ministry to provide for these needs. Read the Form to see if you agree with this interpretation. Of course, if you “opt out” then you must carefully invest the savings of not paying the 15.3% SECA tax. If you earn at least 40 quarters of non-ministry employment you will still qualify for Medicare insurance at age 65 (under current law) and earn a small social security retirement benefit (learn more at www.ssa.gov). But you must plan to use some of your ministry pay to replace the government’s public insurance — including life and disability coverage.


This excerpt is a portion of our top 10 list for new ministers. If you would like to see all of the frequently asked questions ministers have you can visit this link. 




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