What are some of the effects of checking the 4029 or the 4361 box on the SE screen?
For a person covered under an approved Form 4029 or 4361, all self-employment income is no longer considered earned income. These approved forms are indicated in the software on screen SE (on the Taxes tab) by checking the boxes IRS Approved Form 4361 – Minister claims exemption from SE tax or IRS Approved Form 4029 – Members of religious group exempt from Social Security and Medicare taxes. Checking one of these boxes would make EIC qualification depend exclusively on income other than self-employment income.
For more information, see Special EITC Rules and Publication 596 Earned Income Credit (EIC).
For either of these IRS-approved exemptions you indicate on the SE screen, “Form 4361" or "Form 4029" will print opposite self-employment tax on Schedule 2, line 4. In addition, the following statement, "IRS-approved Form 4361, Exemption from SE Tax", will print at the bottom of the CLERGY worksheet for those ministers who have opted out of social security coverage.
Note: If you marked the 4361 box for the minister opting out of Social Security, the
software may still calculate and generate Schedule SE (Self-Employment). To prevent this, you must enter 813000 as the BUSINESS CODE on screen C.
If the minister was issued a Form W-2 from the religious institution, you may need to select P as the Special Tax Treatment on the W2 screen, if applicable. See Related Links below for more details on Clergy returns.
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