Discussion:Missionary living allowance - expense reimb or SE Income?

Taxpayer is working in Africa indefinitely as a missionary/professor at a Christian University. Moved to Africa in Jan 2007. A US 501(c)(3) that sponsors this University pays taxpayer an allowance for living expenses (approx 7500 in 2007). The taxpayer also received $2500 for living expenses from the University. After bona fide residency is established, the foreign income will qualify for the foreign income exclusion. Taxpayer is required to report the details of these expenses to the 501(c)(3).

Questions: Can the funds received be treated as expense reimbursement under an accountable plan and therefore not be reportable on the tax return, or is this SE income?

Also, wouldn't it be easier to qualify for Sec. 911 under the physical presence test?

"OVERSEAS DUTY. Your net earnings from self-employment are determined without any foreign earned income exclusion or the foreign housing exclusion or deduction if you are a U.S. citizen or resident alien who is serving abroad and living in a foreign country."

If taxpayer has an accountable plan and all funds received had business connection, meet the substantiation tests and excess amounts were required to be returned, then I can leave off the return, right?

If not, funds received are reportable as SE income and we need to deduct all expenses that have a business connection, which in this case are travel, lodging and meals away from home while on fundraising trips,expenses incurred in connection with teaching, etc. and deduct on Sch C. Can any of the living expenses overseas be deducted? I'm guessing no.

Just trying to keep client who only received 10K from paying 1500 in SE tax...any other suggestions?

As far as Baptizing, we take a wholesale approach. I got a hot tub rigged up on the back of my Dodge Ram, and we git most of 'em fixed up in that. Now, for the repeat sinner, I'll take the air out of the shocks and go down an unpaved road, and if that don't wash the sin away, nothing will brother.

Sometimes we do a jamboree, and I'll rent out a car wash and run several hundred thru.

To complicate matters, taxpayer is a retired TX teacher who did not have SS tax withheld. Now we need to determine how paying SE and will affect future Social Security benefits since the Windfall Elimination Provision applies...always a new challenge...

CrowJD & IRSfixer - y'all are makin' me laugh!

http://www.taxalmanac.org/index.php/Market_Segment_Specialization_Program_Audit_Technique_Guides

the one covering, you guessed it, ministers.

The exemption applies only to net earnings from the exercise of the ministry, in the exercise of the duties required by the religious order, or from the practice as a Christian Science practitioner. Once having filed a valid application for exemption, a minister, member, or practitioner cannot later acquire Social Security credit for earnings from these services. However, Social Security taxes will continue to be paid by any minister, member, or practitioner filing such a certificate on any other self-employment income or covered wages.

Somewhat clear as to other covered earnings being taxed, which should result in earning benefits.

Make mine a Banana Daquiri please :)