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ashleyweece
New Member

If I opted out of taxes as a minister using form 4361 do i need to file a tax return? My spouse is not a minister, should she file separately then if I do not file?

I have opted out and been approved to not have taxes taken out with form 4361. However, my wife still pays taxes. Do I even need to file a tax return if I no longer pay taxes? If I don't need to file a tax return, should she file as married filing separately?

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Opus 17
Level 15

If I opted out of taxes as a minister using form 4361 do i need to file a tax return? My spouse is not a minister, should she file separately then if I do not file?

You still owe federal and state income tax, you are only exempt from social security and medicare taxes (self-employment tax).  You also owe social security and medicare tax on any income from non-religious work.

In most cases, joint filing will result in a lower overall tax for married spouses even when there is a large income disparity between the spouses.

Even though clergy are considered self-employed for some tax purposes, most pastors are common law employees and will receive a W-2.  (You are a common law employee if you answer to a board, the congregation or the denomination -- someone that has the authority to hire and fire you and determine your working conditions.)  Your W-2 should have your taxable wages in box 1 and boxes 2-6 blank.  Enter your W-2 in Turbotax and check the box for "religious wages" on the page of special circumstances.  You will be asked about your housing allowance and whether or not you have an approved form 4361.  Answer appropriately.

Add your spouse's income and your combined personal deductions and dependents and determine the overall tax you owe or refund you get.

If all of your income is declared a non-taxable housing allowance, you will need to use the self-employed version and create a schedule C for yourself, because you can't enter a W-2 with zero in box 1.  For the business code, use code 813000, this will trigger questions about the housing allowance and form 4361.  Enter any side-income you get (cash from performing weddings, funerals, etc.) that is outside the scope of the church's written declaration of your housing allowance.  (Remember that to be valid, a housing allowance must be designated in advance and in writing by your board or denomination.)

See this for more.  http://www.ecfa.org/PDF/2016-Preparing-Tax-Returns-For-Clergy.pdf


*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*

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1 Reply
Opus 17
Level 15

If I opted out of taxes as a minister using form 4361 do i need to file a tax return? My spouse is not a minister, should she file separately then if I do not file?

You still owe federal and state income tax, you are only exempt from social security and medicare taxes (self-employment tax).  You also owe social security and medicare tax on any income from non-religious work.

In most cases, joint filing will result in a lower overall tax for married spouses even when there is a large income disparity between the spouses.

Even though clergy are considered self-employed for some tax purposes, most pastors are common law employees and will receive a W-2.  (You are a common law employee if you answer to a board, the congregation or the denomination -- someone that has the authority to hire and fire you and determine your working conditions.)  Your W-2 should have your taxable wages in box 1 and boxes 2-6 blank.  Enter your W-2 in Turbotax and check the box for "religious wages" on the page of special circumstances.  You will be asked about your housing allowance and whether or not you have an approved form 4361.  Answer appropriately.

Add your spouse's income and your combined personal deductions and dependents and determine the overall tax you owe or refund you get.

If all of your income is declared a non-taxable housing allowance, you will need to use the self-employed version and create a schedule C for yourself, because you can't enter a W-2 with zero in box 1.  For the business code, use code 813000, this will trigger questions about the housing allowance and form 4361.  Enter any side-income you get (cash from performing weddings, funerals, etc.) that is outside the scope of the church's written declaration of your housing allowance.  (Remember that to be valid, a housing allowance must be designated in advance and in writing by your board or denomination.)

See this for more.  http://www.ecfa.org/PDF/2016-Preparing-Tax-Returns-For-Clergy.pdf


*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*

View solution in original post

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