OK, so at least it should be somewhat interesting, but it is fascinating to me.
This is not a personal anecdote. As some may know, I’m a public school teacher, not a religious worker like a pastor or missionary.
Anyway, years ago a friend of mine(Friend “A”) mentioned not having to pay social security because he works for a religious(missionary) organization. His choice - he invests that cash instead and he will draw no social security when he gets to that age. I thought not much of it until about a month ago.
I asked a different friend(Friend “B”), who is a youth pastor, about it and he said, “Well, you have to object on religious grounds, which I don’t. I’d feel dishonest saying so. Therefore, I pay social security tax.” He still gets the housing thingy for religious folks, but that is separate and not the issue.
I mentioned this to Friend A and he said he’s positive that, 16 years ago, when he hired into the missionary organization he works for, that he did not have to sign any “philosophical objection”, but merely that the Human Resources department took care of it for him.
Lots of religious personnel can claim self employment tax exemption, form 4361. Those that object to social security are usually specific faiths, like Amish, Mennonite, or other Anabaptists. I assume you mean he’s not one of those.
No, he works essentially as a missionary for a mainstream evangelical Christian group, which must employ thousands.
And he does not object on religious grounds at all. He claims that back then(15-20 years ago), he didn’t have to sign any kind of objection. Hence, my three questions above.
37 years ago I took a position as a church pastor. At that time I had the option of opting out of Social Security on religious grounds (I did not need a moral objection, it was simpy an option that related to separation of church and state, etc.) At that time – most Catholic Priests opted out because they were guaranteed by the diocese to be cared for as long as they lived. Members of religious orders always opted out for the same reason. I had been paying into Social Security from the time I was 15 but could still leave, but here is the huge BUT – once out, I could not get back in so long as I was in the ministry. I stayed in and a year ago began collecting.
What sucked was I paid as self-employed so it meant paying both 1/2’s every quarter. Even knowing that I stayed in because I wasn’t so sure I’d have the discipline to put that money aside every month and I’d also have to buy disability insurance and additional life insurance to get the same level of protection that Social Security offers.
I have no regrets because clergy get some sweet tax deals and the portion of your salary that is designated as housing isn’t taxable, there’s the car allowance and at least in my denomination, an absolutely terrific pension plan. I retired after 35 years of full-time ministry at full pay (net) and 2 years later began collecting my Social Security which is a bonus. I make more now than I did when I was the pastor of the church.
To answer the question, I didn’t have to “sign” any form, but there was a box that I had to check on my first tax return. It was a long time ago and the best I can recall it was checking a yes or no box next to a rather generic question asking I’d I elected to exempt myself from Social Security.
Too short answer, ministers are considered self-employed when it comes to SS, but are considered employees by the IRS.
Other employees of religious organizations are considered employees by SS. I have no idea whether “youth ministers,” “music ministers,” “outreach ministers” and other such titles count, or whether the minister has to be ordained.
Also, the definition of “Minister” is so broad when it comes to different faiths that there really isn’t a meaningful way to match up who is and who is not a minister with legal status questions. E.g. in the Jehovah’s Witness faith, every adult member is considered an ordained minister, but there are people set apart as sort of uber-ministers with supervisory authority over other ministers and it is these people who are generally accepted by the government as “ordained ministers” authorized to perform legal marriages etc. On the other hand, Quakers reject the idea of ordination and don’t have positions of authority per se but generally elect representatives to sign whatever government documents are necessary and to be the “minister” necessary to witness marriages.
So what would someone do if they made a mistake in the past and now want to correct their Social Security situation? I have a feeling he owes social security taxes. I know most people would say “don’t say anything”, but if he feels it is wrong and wants to fix it, what would(could) he do?
As originally set up, ministers were exempt from SS. Ordained ministers or equivalent - lots of discussion on what’s equivalent. One could file a waiver of exemption. Later ('84) law changed so inclusion was default, you had to file waiver to get out. One decision, no changes unless change in profession. Also discussion over self-employed, or not. Advantages both ways. Self-
employed (all, not just clergy) used to pay something like 70% of total SS tax; now its 100%.
Grad school, too. During the year I pay $0 SS or Medicare. If I teach in the summer, I pay Medicare, but the 6.2% that should go to SS instead goes into a 457 plan (state government employee, I think is the reason), which I can roll over or remove any time without any penalty besides taxes.
