My husband paid in social security taxes before being exempt 4361 as a minister in November. How do we get them back?

[japanesejess]

He had housing allowance withheld but paid in the taxes on his salary.

[Opus 17]

Were the FICA and medicare taxes deducted from his wages, and are they on his w-2 in boxes 4 and 6?

[japanesejess]

Yes

[Opus 17]

You've got a big problem.  I don't know how to get the SS tax back in this situation.  

Typically, clergy are exempt from having FICA and medicare taxes withheld from their paychecks.  Instead, they are paid their full salary and then pay SECA tax on a schedule C or schedule SE when they file their tax returns.  In this case, once the form 4361 is approved, he would simply not file the schedule SE for this year and not pay the tax.  He could also file amended returns for the past 3 years to claim a refund of past years SE tax (since the form 4361 is retroactive to whenever he started receiving pastoral income.)

The problem is that by withholding FICA and medicare from his paycheck, his church is not paying him as a pastor, they are paying him as a regular employee, and there is no procedure to get a refund of that.  I think that what would need to happen is for the church to correct its tax filings.  The church would need to amend its form 941s, and get a refund of the FICA and medicare from the IRS, and pay that money directly to your husband, and issue a corrected W-2 showing wages in box 1 and blanks for box 3, 4, 5 and 6.  This would be moderately complex but doable for 2015 if they start soon.  If your husband was also a pastor in 2014, 2013 etc and FICA and medicare taxes were withheld, it will be harder to fix for those past years.

Your husband and the church finance people (and the payroll provider if it is outsourced)  should probably have a meeting with a tax professional in your area who is expert in clergy and church taxes.

This is also a good resource http://www.ecfa.org/PDF/2016-Preparing-Tax-Returns-For-Clergy.pdf

[tracy2]

Couldn't you just claim the amount of FICA withheld on the W2 under Excess Social Security and Tier 1 RRTA?

[Opus 17]

No, that's going to be an audit flag.

If the person was working in a non-religious job at a church, they are subject to FICA and medicare.  Even with an approved form 4361, a clergy person working in a non-clergy position is subject to FICA and medicare.

If the taxpayer was a clergy person all along, just waiting for the approved form 4361, then the church should never have withheld FICA in the first place.  And there is no tax procedure I know of to get it back, other than having the church issue a corrected W-2 and have the church refund the money.  But this can be quite complicated.

The issue is similar to a case where a person's regular job withholds excess FICA and medicare tax.  If you work 2 jobs, and your aggregate social security withholding is over the annual maximum, you can get a refund on your tax return.  But if you work one job, and your employer over-withholds because they screw up, you can't use the excess SS form, you can only get a refund from the employer.

[sallovesalana]

yes i opted out and then received a form to get back the back social security paid (i believe witjjn that year) call the irs and ask for that form and explain the situation

[NCOFFEY44]

@sallovesalana Do you have any way of looking up the form #? I'm dealing with the same issue as the op and am getting nowhere with asking the IRS. I know we can file a 1040X for previous years. But, how do I file for 2021 when my husband has both ss exemption AND an approved form 4361 for 2021? 

[Opus 17]

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@NCOFFEY44 wrote:

@sallovesalana Do you have any way of looking up the form #? I'm dealing with the same issue as the op and am getting nowhere with asking the IRS. I know we can file a 1040X for previous years. But, how do I file for 2021 when my husband has both ss exemption AND an approved form 4361 for 2021? 

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You replied to a discussion with a date of May, 2019 but is probably older, because discussions all got the wrong date stamp when they were moved from the old discussion software to the current software.

What is your question?  Your church should not be withholding social security tax from a minister's wages.  If they are, they are doing it wrong.  You may be able to get a refund of the social security that was withheld on a W-2 by filing a form 843.  This is separate from your tax return, is sent to a different address, and can't be e-filed.

https://www.irs.gov/forms-pubs/about-form-843

If the church is not withholding SS tax, then you would be paying SE tax on your minister's wages using schedule SE.  In Turbotax, when you enter your W-2, check the box for religious wages and then check the box for form 4361 on the next page.

[DaveF1006]

It depends. According to this IRS publication, you may file a form 843 to issue a refund to an employee of social security or Medicare taxes that were withheld in error, but only if your employer will not adjust the overcollection. Please refer to this publication for further information.