45.6 Self-Employment Tax Rules for Certain Positions

Table 45-1 Self-Employed or Employee?

If you are— Tax rule—
Babysitter Where you perform services in your own home and determine the nature and manner of the services to be performed, you are considered to have self-employment income. However, where services are performed in the parent’s home according to instructions by the parents, you are an employee of the parents and do not have self-employment earnings.In one case, the Tax Court held that grandparents who provided care only for their own grandchildren and received payments from a state-sponsored childcare assistance program had to pay income tax on the payments, but the payments were not subject to self-employment tax because the grandparents’ primary purpose in providing the care was not to make a profit.
Clergy If you are an ordained minister, priest, or rabbi, a member of a religious order who has not taken a vow of poverty, or a Christian Science practitioner, you are subject to self-employment tax, unless you elect not to be covered on the grounds of conscientious or religious objection to Social Security benefits. An application for exemption from Social Security coverage must be filed on Form 4361 by the due date, including extensions, of your income tax return for the second taxable year for which you have net earnings from services of $400 or more. An exemption, once granted, is irrevocable.Self-employment tax does not apply to the rental value of any ...

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