Is it possible to opt out of Social Security after the 2-year deadline?
Unlike other employees, a licensed or ordained minister has the option to opt out of Social Security and Medicare (FICA). If a minister wants to opt out they must file Form 4361 by the tax deadline including extension, in the second year in which they have received ministerial income of $400 or more. This election is final, and the minister cannot opt back into FICA taxes.
At MinistryCPA, we have received questions from ministers who have exceeded the two year deadline and desire to opt-out. There have been several court cases which provide guidance in answering this question. Some have argued that the minister was unaware of the deadline, had mistakenly believed they had filed a timely election, were given incorrect advice by an IRS employee, or their opposition to participate in Social Security and Medicare did not arise until after the 2-year deadline had passed. In each of these cases the courts have not allowed exception to the 2-year deadline.
The only exception that has been allowed is when a minister has 1) become ordained by another faith/denomination, 2) developed an opposition to Social Security benefits as a result of his new faith, and then 3) filed Form 4361 within 2 years of being ordained by that faith.
If you have any questions about Form 4361 or are looking to opt out yourself, please contact our office.