Form 4361 / Minister's Opt-Out SSA

[Burke]

Does a church have a responsibility to require a copy of this approved form prior to issuing W-2? If it cannot be produced, does that change how the W-2 is prepared? Likewise, do you as the preparer of the income tax return for said minister require a copy of this form prior to preparing the return? And if it cannot be produced, do you prepare the taxes with the earnings subj to FICA?

[Snaggletooth]

Dunno

I really don't, but I am commenting because many of these ministers signed Form 4361 years ago, maybe decades ago.

The question is about responsibility, but each of us has our own idea about crossing the line between due diligence and auditing. My own idear is that I can rely on the word of the client unless he presents me with a situation that is not supportable.

There is one thing about this situation that eliminates any shades of grey. IRS either has this 4361 or it doesn't. If they don't have it, then the minister has very little to gain by misrepresentation, because he will have a grievous trail of notices and letters from Uncle Sam. If you have any doubts, I would mention what fate has in store for him.

[MAMalody]

Does a church have a responsibility to require a copy of this approved form prior to issuing W-2? If it cannot be produced, does that change how the W-2 is prepared? Likewise, do you as the preparer of the income tax return for said minister require a copy of this form prior to preparing the return? And if it cannot be produced, do you prepare the taxes with the earnings subj to FICA?

The church does not have a responsibility to have a copy of any approved Form 4361. The existence or non-existence of an approved Form 4361 has no impact on the preparation of the w-2. It will impact how the pastor completes his tax return, however.

My entire practice is composed of clergy and religious works and all I do is ask them if they have an approved copy...about 1/3 of them do. I also require a copy of their prior year tax return and it will verify this, anyway.

[Burke]

The church does not have a responsibility to have a copy of any approved Form 4361. The existence or non-existence of an approved Form 4361 has no impact on the preparation of the w-2. It will impact how the pastor completes his tax return, however.

My entire practice is composed of clergy and religious works and all I do is ask them if they have an approved copy...about 1/3 of them do. I also require a copy of their prior year tax return and it will verify this, anyway.

Thank you for your response, that clarifies the church/W-2 issue. However, you say "about 1/3 of them" have this form. What do you do about the other 2/3? Are you saying if the IRS does NOT have this on record, their tax return will be rejected if they submit it as if they do?

[MAMalody]

Thank you for your response, that clarifies the church/W-2 issue. However, you say "about 1/3 of them" have this form. What do you do about the other 2/3? Are you saying if the IRS does NOT have this on record, their tax return will be rejected if they submit it as if they do?

What I was trying to indicate is that 1/3 of my clients have an approved F4361 and 2/3s do not have a F4361 (they either did not qualify for it or had not applied during the application window). If the IRS tries to verify the F4361 and are unable to do so, they would adjust the return and send out an error notice that your client would have to deal with. If they still retain their approved copy it would just be some simple correspondence if they did not, it would be much more difficult.

[Burke]

Gotcha. Ok, so I will ask if they have it and mark my records I did so, but not require a copy of the form. Some denominations (like Episcopal) do not allow their ministers to opt-out as the established church has no objection to the SS tax.