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Self Employment Tax Considerations For Clergy

If you are a missionary or clergy working in another country (receiving form 1099 from a church), you may be liable for self-employment tax if your place of employment is in a country without a totalization agreement,

The income should be reported on Schedule C, Form 1040.  If the minister has incurred out of pocket expenses related to this income, they should be reported as expenses on the Schedule C.

Schedule SE will need to be completed to calculate SE tax on the minister’s Form W-2 wages, parsonage and utilities allowance.

This may open you up to self employment tax, which may wind up being greater than the potential social security payments you may receive in the future. This may certainly feel unfair, especially if you are up in age and are donating your time to better causes in the 3rd world – but we are not here to argue fairness, but to help explain your options.

Whole Story at TFX.

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