How to Properly Prepare Form 4361
Ministers can request exemption from paying self-employment taxes which includes exemption from Social Security taxes. Exemption must be applied for using IRS Form 4361 which can be a bit tricky. Here are the steps to take in order to accurately and easily fill out and submit the form.
1. Download Form 4361 from the IRS website and enter the basic info requested in section 1 including your social security number.
2. Fill out the religious position description that best describes you in Section 2.
3. Enter the date you were ordained and/or licensed in Section 3. A supporting document must be attached.
4. Indicate the legal name, address and employer identification number of the religious order to which you belong in section 4.
5. In section 5 of tax preparation document Form 4361 record the first 2 years after the date ordained or licensed that you had net self-employment earnings of $400 or more.
6. Complete Section 6 if this applies to you.
7. Section 7 certifies that you are conscientiously opposed to acceptance of public insurance that makes payments in the event of death, disability, old age, retirement or for medical care.
8. Sign, date and submit to the IRS for approval.
In addition to this basic info, the fields in section 7 of this tax preparation document are vital when it comes to your exemption being approved. A specific conscientious objection to receiving government insurance normally provided by Social Security must be given. This data is critical in that can make or break a request for tax exemption.
Issues Causing Denial
The IRS is known to deny a Form 4361 if the initial criteria of the form are not met. Some of the most basic oversights are an applicant that failed to sign the tax preparation document before sending it in. Also, oftentimes ministers confuse changing faiths as enough justification for a Form 4361 which is incorrect. The conscientious-objection statement needs to be filled in and included and a simple change of ordination does not meet the criteria of the IRS.
Sometimes denials are granted due to insufficient income earned prior to the filing period or wrong language was used on the form. In any case, you may want to double check with a tax preparation professional to ensure that your paperwork is approved once submitted.