Tax Advisor’s – Your Thoughts On This Question Of The Week?
A 62 year old exempt Catholic Priest has paid 44 quarters of social security and medicare payments with the past eleven years of income tax returns. He qualifies for medicare at age 65, reduced social security at age 62 and full social security at age 66.
Can the Catholic Priest stop paying social security and medicare payments on future earnings?
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3 comments on “Tax Advisor’s – Please Help Answer Tax Question Of The Week!”
I believe that if he continues to pay in his monthly Social Security payments will increase – but you would have to do a cost-benefit analysis to determine if it is worth his while to do so. Also don’t forget that if he takes early Social Security payments he is limited in what he can earn.
I don’t believe that the priest can stop paying the Social Security taxes on wages that he continues to earn even though he had fully paid for 40 quarters. The social security benefits that he draws down in future will be based on the highest 40 quarter amounts paid for calculating his benefits. On the assumption that his future pay is higher than some of the earlier quarterly payments made, he will benefit from these additional payments.
Clearly, he should delay claiming the social security income if continues to be employed. Otherwise, as much as 85% of the social security benefits could be subject to federal and state income taxes.
The Priest can possible gain exemption from paying social security taxes for future years if he files IRS Form 4361, Application for Exemption From Self-Employment Tax for Use by Ministers, Members of Religious Orders and Christian Science Practitioners. Of course, he will have to meet the requirements established by the IRS. Electing out will not affect the social security benefits to which he is otherwise entitled.
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