skip navigation
Search Help
Navigation Help

Tax Map Index

Tax Topic Index

Affordable Care Act
Tax Topic Index

Exempt Organization
Tax Topic Index

Tax Topics

About Tax Map Website
Publication 17

Special Rules for Certain Employees(p52)

This section deals with special rules for people in certain types of employment: members of the clergy, members of religious orders, people working for foreign employers, military personnel, and volunteers.


Generally, if you’re a member of the clergy, you must include in your income offerings and fees you receive for marriages, baptisms, funerals, masses, etc., in addition to your salary. If the offering is made to the religious institution, it isn’t taxable to you.
If you’re a member of a religious organization and you give your outside earnings to the religious organization, you still must include the earnings in your income. However, you may be entitled to a charitable contribution deduction for the amount paid to the organization. See chapter 24.


A pension or retirement pay for a member of the clergy usually is treated as any other pension or annuity. It must be reported on lines 16a and 16b of Form 1040 or on lines 12a and 12b of Form 1040A.


Special rules for housing apply to members of the clergy. Under these rules, you don’t include in your income the rental value of a home (including utilities) or a designated housing allowance provided to you as part of your pay. However, the exclusion can’t be more than the lesser of the following amounts: 1) the amount actually used to provide or rent a home; 2) the fair market rental value of the home (including furnishings, utilities, garage, etc.); 3) the amount officially designated (in advance of payment) as a rental or housing allowance; or 4) an amount that represents reasonable pay for your services. If you pay for the utilities, you can exclude any allowance designated for utility cost, up to your actual cost. The home or allowance must be provided as compensation for your services as an ordained, licensed, or commissioned minister. However, you must include the rental value of the home or the housing allowance as earnings from self-employment on Schedule SE (Form 1040) if you’re subject to the self-employment tax. For more information, see Pub. 517, Social Security and Other Information for Members of the Clergy and Religious Workers.

Members of Religious Orders(p52)

If you’re a member of a religious order who has taken a vow of poverty, how you treat earnings that you renounce and turn over to the order depends on whether your services are performed for the order.

Services performed for the order.(p52)

If you’re performing the services as an agent of the order in the exercise of duties required by the order, don’t include in your income the amounts turned over to the order.
If your order directs you to perform services for another agency of the supervising church or an associated institution, you’re considered to be performing the services as an agent of the order. Any wages you earn as an agent of an order that you turn over to the order aren’t included in your income.


You’re a member of a church order and have taken a vow of poverty. You renounce any claims to your earnings and turn over to the order any salaries or wages you earn. You’re a registered nurse, so your order assigns you to work in a hospital that is an associated institution of the church. However, you remain under the general direction and control of the order. You’re considered to be an agent of the order and any wages you earn at the hospital that you turn over to your order aren’t included in your income.

Services performed outside the order.(p52)

If you’re directed to work outside the order, your services aren’t an exercise of duties required by the order unless they meet both of the following requirements.If you’re an employee of a third party, the services you perform for the third party won’t be considered directed or required of you by the order. Amounts you receive for these services are included in your income, even if you have taken a vow of poverty.


Mark Brown is a member of a religious order and has taken a vow of poverty. He renounces all claims to his earnings and turns over his earnings to the order.
Mark is a schoolteacher. He was instructed by the superiors of the order to get a job with a private tax-exempt school. Mark became an employee of the school, and, at his request, the school made the salary payments directly to the order.
Because Mark is an employee of the school, he is performing services for the school rather than as an agent of the order. The wages Mark earns working for the school are included in his income.

Foreign Employer(p52)

Special rules apply if you work for a foreign employer.

U.S. citizen.(p52)

If you’re a U.S. citizen who works in the United States for a foreign government, an international organization, a foreign embassy, or any foreign employer, you must include your salary in your income.
Social security and Medicare taxes.(p52)
You’re exempt from social security and Medicare employee taxes if you’re employed in the United States by an international organization or a foreign government. However, you must pay self-employment tax on your earnings from services performed in the United States, even though you aren’t self-employed. This rule also applies if you’re an employee of a qualifying wholly owned instrumentality of a foreign government.

Employees of international organizations or foreign governments.(p52)

Your compensation for official services to an international organization is exempt from federal income tax if you aren’t a citizen of the United States or you’re a citizen of the Philippines (whether or not you‘re a citizen of the United States).
Your compensation for official services to a foreign government is exempt from federal income tax if all of the following are true.
Waiver of alien status.(p52)
If you’re an alien who works for a foreign government or international organization and you file a waiver under section 247(b) of the Immigration and Nationality Act to keep your immigrant status, different rules may apply. See Foreign Employer in Pub. 525.

Employment abroad.(p52)

For information on the tax treatment of income earned abroad, see Pub. 54.


Payments you receive as a member of a military service generally are taxed as wages except for retirement pay, which is taxed as a pension. Allowances generally aren’t taxed. For more information on the tax treatment of military allowances and benefits, see Pub. 3, Armed Forces' Tax Guide.

Differential wage payments.(p52)

Any payments made to you by an employer during the time you’re performing service in the uniformed services are treated as compensation. These wages are subject to income tax withholding and are reported on a Form W-2. See the discussion under Miscellaneous Compensation, earlier.

Military retirement pay.(p52)

If your retirement pay is based on age or length of service, it’s taxable and must be included in your income as a pension on lines 16a and 16b of Form 1040 or on lines 12a and 12b of Form 1040A. Don’t include in your income the amount of any reduction in retirement or retainer pay to provide a survivor annuity for your spouse or children under the Retired Serviceman's Family Protection Plan or the Survivor Benefit Plan.
For more detailed discussion of survivor annuities, see chapter 10.
If you’re retired on disability, see Military and Government Disability Pensions under Sickness and Injury Benefits, later.

Veterans' benefits.(p52)

Don’t include in your income any veterans' benefits paid under any law, regulation, or administrative practice administered by the Department of Veterans Affairs (VA). The following amounts paid to veterans or their families aren’t taxable.


The tax treatment of amounts you receive as a volunteer worker for the Peace Corps or similar agency is covered in the following discussions.

Peace Corps.(p53)

Living allowances you receive as a Peace Corps volunteer or volunteer leader for housing, utilities, household supplies, food, and clothing are generally exempt from tax.
Taxable allowances.(p53)
The following allowances, however, must be included in your income and reported as wages.


Gary Carpenter, a Peace Corps volunteer, gets $175 a month as a readjustment allowance during his period of service, to be paid to him in a lump sum at the end of his tour of duty. Although the allowance isn’t available to him until the end of his service, Gary must include it in his income on a monthly basis as it’s credited to his account.

Volunteers in Service to America (VISTA).(p53)

If you’re a VISTA volunteer, you must include meal and lodging allowances paid to you in your income as wages.

National Senior Services Corps programs.(p53)

Don’t include in your income amounts you receive for supportive services or reimbursements for out-of-pocket expenses from the following programs.

Service Corps of Retired Executives (SCORE).(p53)

If you receive amounts for supportive services or reimbursements for out-of-pocket expenses from SCORE, don’t include these amounts in gross income.

Volunteer tax counseling.(p53)

Don’t include in your income any reimbursements you receive for transportation, meals, and other expenses you have in training for, or actually providing, volunteer federal income tax counseling for the elderly (TCE).
You can deduct as a charitable contribution your unreimbursed out-of-pocket expenses in taking part in the volunteer income tax assistance (VITA) program. See chapter 24.