[Lachayo]

The question is actually, can I opt out of paying FICA if I am self employed?

[AtlantaTaxExpert]

Negative!

The self-employed pay the equivalent taxes under the title "self-employment taxes", which are calculated under Schedule SE using the net income reported on Schedule C.

[MukatA]

Since you are self employed no one withholds social security and medicare taxes from your income, you must pay it at 15.3% when you file your tax return. Before your tax return you may have to make estimated tax payments. Also you must file your tax return if yourself employed income is $400 or more.

[AtlantaTaxExpert]

Agreed.

[Mobea]

The only exemption to this is if you are paid as a clergyman or some sort. Then you have the option of not withholding FICA. You have to sign a statement that states that you do not believe for religious reasons that the government should pay for Medicare or retirement. That you believe the church is responsible for that.

[MukatA]

Please don't file any such statement unless you have read it yourself, and is valid in your case, in any IRS publication. Any such mistake will be treated as frivolous return. For 2007, the penalty is $5,000. Plus you must pay the amount due with interest and penalty.

If you had church employee income of $108.28 or more, you must file Form 1040 and schedule SE (form 1040).

[Mobea]

It IS a valid option if your only income is as a church employee. My daughter is a minister BUT she chooses to pay FICA because she DOES believe in Medicare and Social Security. I was not implying that Lachayo file a frivolous return.

[s_cianci]

Nope. It's part of your self-employment tax.

[Mobea]

Election by Church Employees Who Are Opposed to Social Security and Medicare
You may be able to choose to be exempt from social security and Medicare taxes, including the SE tax, if you work for a church (or church-controlled nonprofit division) that does not pay the employer's part of the social security tax on wages. You can make the choice if you are a member of a religious sect or division opposed to social security and Medicare. This exemption does not apply to your service, if any, as a minister of a church or as a member of a religious order.

You can make this choice by filing Form 4029. See Requesting exemption—Form 4029, later, under Members of Recognized Religious Sects.

[Fr_Chuck]

I think the one person is confusing paying income taxes, which is required of church employess, and the paying of the self employment or the FCIA taxes. These are two separate taxes.

There are several exceptions to the social secuity taxes, rail road employees, often pay into a separate account for railroad employees that is not part of the standard social seucity system. Pastors have exepmptions for FCIA but not federal income taxes.

[Mobea]

You are correct Fr Chuck. That's why I was citing an example of when one could be exempt from paying FICA if they were self-employed as a pastor. The question that was orginially asked was "Can I opt out of paying FICA"

[Fr_Chuck]

Yes, I think the other poster was confused of those people who try not to pay the actual income tax.