Table of Contents
Increased earnings subject to social security. For 2007, the maximum wages and self-employment income subject to social security tax (6.2%) is increased to $97,500. All wages and self-employment income are subject to Medicare tax (1.45%).
Modified AGI limit for retirement savings contribution credit increased. For 2007, you may be able to claim the retirement savings contribution credit if your modified adjusted gross income (AGI) is not more than:
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$52,000 if your filing status is married filing jointly,
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$39,000 if your filing status is head of household, or
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$26,000 if your filing status is single, married filing separately, or qualifying widow(er).
See Publication 590, Individual Retirement Arrangements (IRAs), for more information.
Modified AGI limit for traditional IRA contributions increased. For 2007, you may be able to take an IRA deduction if you were covered by a retirement plan at work and your modified AGI is:
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Less than $103,000 if married filing jointly or qualifying widow(er), or
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Less than $62,000 if single or head of household.
If you file a joint return and either you or your spouse was not covered by a retirement plan at work, you may be able to take an IRA deduction if your modified AGI is less than $166,000.
Modified AGI limit for Roth IRA contributions increased. For 2007, you may be able to contribute to your Roth IRA if your modified AGI is:
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Less than $166,000 if married filing jointly or qualifying widow(er), or
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Less than $114,000 if single, head of household, or married filing separately and did not live with your spouse at any time during the year.
Photographs of missing children. The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child.
Social security and Medicare taxes are collected under two systems. Under the Self-Employment Contributions Act (SECA), the self-employed person pays all the taxes. Under the Federal Insurance Contributions Act (FICA), the employee and the employer each pay half of the taxes. No earnings are subject to both systems.
Table 1. Are You Covered Under FICA or SECA?
Find your occupation in the left column and read across the table to find if you are covered under FICA or SECA. Do not rely on this table alone. Also read the discussion for your occupation in the following pages.
This publication covers the following topics about the collection of social security and Medicare taxes from members of the clergy and religious workers.
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Which earnings are taxed under FICA and which under SECA. (See Table 1 to determine whether FICA or SECA applies.)
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How a member of the clergy (minister, member of a religious order, or Christian Science practitioner) can apply for an exemption from self-employment tax.
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How to figure net earnings from self-employment.
This publication also covers certain income tax rules of interest to the clergy.
A comprehensive example shows filled-in forms for a minister who has income taxed under SECA, other income taxed under FICA, and income tax reporting of items specific to the clergy.
Note.
In this publication, the term “church” is generally used in its generic sense and not in reference to any particular religion.
Internal Revenue Service
Individual Forms and Publications Branch
SE:W:CAR:MP:T:I
1111 Constitution Ave. NW, IR-6526
Washington, DC 20224
National Distribution Center
P.O. Box 8903
Bloomington, IL 61702-8903
Publication
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54 Tax Guide for U.S. Citizens and Resident Aliens Abroad
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525 Taxable and Nontaxable Income
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529 Miscellaneous Deductions
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535 Business Expenses
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590 Individual Retirement Arrangements (IRAs)
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596 Earned Income Credit (EIC)
Form (and Instructions)
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SS-8
Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding -
SS-16
Certificate of Election of Coverage Under the Federal Insurance Contributions Act -
Schedule SE (Form 1040)
Self-Employment Tax -
1040-ES
Estimated Tax for Individuals -
1040X
Amended U.S. Individual Income Tax Return -
4029
Application for Exemption From Social Security and Medicare Taxes and Waiver of Benefits -
4361
Application for Exemption From Self-Employment Tax for Use by Ministers, Members of Religious Orders and Christian Science Practitioners -
8274
Certification by Churches and Qualified Church-Controlled Organizations Electing Exemption From Employer Social Security and Medicare Taxes
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