How to File Your Taxes If You Are a Missionary

While being a missionary overseas can lead to exciting cultural opportunities, your duties as a U.S. citizen are often still required. Filing taxes is one example. Although missionaries are allowed special privileges, such as requesting automatic extensions, the process of filing taxes while out of the country can still be tricky.

Instructions

1. Complete an IRS form 8822, if you have not already done so, notifying the IRS of your correct foreign address to avoid any problems with filing your taxes.

2. Read IRS publications 517 and 54, which are designed specifically for clergy and those filing taxes while out of the country. Both are available online at www.IRS.gov, and are invaluable in assisting missionaries in finding and filing the proper forms required for their situations.

3. Determine if you owe taxes on your income, which many missionaries do not. If you are a U.S. Citizen and have been a missionary elsewhere for one complete year, or a period of 330 days within a 12-month period, you are allowed to claim an exclusion on income up to $82,400. If you have served in your position for less time, you will need to file a standard income tax form, such as a 1040 or 1040EZ.

4. Contact the local tax authorities, or read the IRS website on any applicable tax treaties with the country in which you are working. If there is one, you may not be required to file taxes with the IRS.

5. File an IRS form 4361 if you qualify for the exemption, on any income over $400. This applies to ministers, Christian Science practitioners, or members of a religious order that have not taken a vow of poverty. If you are a member of a recognized religious sect that opposes accepting public or private insurance benefits for death, old age, retirement, or disability, including Medicare or Social Security, you must file a Form 4029 instead. Both forms can be requested from the IRS by phone, or downloaded from their website. This must be filed by April 15.

6. File state taxes if your address change is not permanent; in other words, you are keeping your home in your original state of residence.

Tips & Warnings

• If you have taken a vow of poverty, you do not have to pay self-employed tax on your income for qualified services performed for your church.

• If the qualifying exemption form is approved, you will receive an officially approved copy of it from the IRS.

• A missionary may be seen as an independent contractor or employee for tax filing; however, one is always considered self-employed for FICA or SECA purposes when a minister.

• Missionaries are also allowed to "opt out" of paying Social Security taxes, depending on the denomination's position to do so.

• A married missionary whose spouse is also a missionary can double the exclusion amount, if both qualify under the time period rules.

• Income reported must be in U.S. dollars, not foreign currency.

• The country where you are working as a missionary may also require you to file and pay taxes.

• If you do not keep the IRS apprised of address changes, penalties and fees may be charged to you, as well as interest on those amounts.

• The exclusion on earned income does not include other forms of money received, such as interest, dividends, or gambling proceeds.

References

• Bankrate.com
• IRS.gov: Publication 517 - S/S and Other Information for Members of the Clergy
• Tax Tips for Foreign Missionaries

Resources

• One-in-Jesus.Info: US Income & Employment Taxes for Missionaries
• IRS.gov: Publication 54 - Tax Guide for US Citizens and Resident Aliens Abroad
• Uncle Fed's Tax Board: Religious Exemptions