EXEMPTION FROM SOCIAL SECURITY
 

Should a pastor apply for an exemption from Social Security (Form 4361)?

I have never recommended a minister in our fundamental circles to apply for exemption from Self-Employment Tax (Form 4361). The election to apply for exemption is very clearly not to be a financial decision. A minister must be "conscientiously opposed to.. any public insurance that makes payments in the event of death, disability, old age, or retirement; or that makes payments toward the cost of...medical care." In addition, this conscientious objection must be because of his religious principles. Any minister who files Form 4361 must notify his church that, because of his religious principles, he is opposed to public insurance. I see no scriptural support for opposition to public insurance, and therefore, I do not believe a fundamental minister of the gospel can sign such a statement.

There is a general misconception about the election, which implies it to be a good financial decision. I would not concur with that notion! The Social Security program is a good one, and the benefits paid upon retirement are usually the only source of income a minister may have available. The important issue financially is self-discipline. Typically those who have opted out of Social Security have not made adequate provisions for retirement, disability, and Medicare insurance.
 

What do I do if I elect to file an Application for Exemption From
Self-Employment Tax for Use by Ministers, Members of Religious
Orders and Christian Science Practitioners (Form 4361)?

We recommend that you call our office for counsel before you file form 4361 to apply for exemption from Self-Employment tax.

The following steps should be taken in applying for exemption from Self-­Employment Tax: 1) A prayerful and complete study of Scripture should be made, and notes recorded and kept for your records, documenting your conclusions with regard to public insurance. 2) Request Form 4361, Application for Exemption from Self-Employment Tax for Use by Ministers, Members of Religious Orders and Christian Science Practitioners, from the IRS. 3) Notify your church of your religious opposition to public insurance.

4) Mail your completed Form 4361 to the appropriate IRS office, as indicated on the form, and keep a copy for your records. 5) When you receive your approval from the IRS (the approval will be a copy of your form 4361 with some sort of IRS stamp across the face of the application) make several copies and keep them in several different locations. If you are ever audited and cannot produce your approved exemption, you could be accessed penalties and interest and required to pay your Self-Employment Tax for the past three years.