Discussion:Pastors 1099....HELP!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
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Discussion Forum Index --> Basic Tax Questions --> Pastors 1099....HELP!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
Discussion Forum Index --> Tax Questions --> Pastors 1099....HELP!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
Arkietaxman14 (talk|edits) said: | 21 May 2008 |
| I have a new client who is an ordained minister. I have never worked with a ministers return before, but I have been doing some reading up on thier issues. He has been paid as a sub-contractor for some time now. His residence is free provided by the church and is not included as compensation on the 1099. So all that is reported is what he was written checks for by the church as sub-contract labor. His previous tax preparer was allowing him to take his tithes to the church he worked for as a sch-c deduction from revenue as a retun or allowance on line 2 of the schedule C. I am not comfortable with this scenario, however he claims that his taxes have been done like this for 20 years and never questioned. Is this approach acceptable? | |
| 21 May 2008 | |
| No. I just researched this for a new client who is a minister. He had heard from other pastors that they are able to have their tithes to the church deducted from pay pre-tax. There is no such provision that I could find, and, in fact, several religious organizations have advised their pastors that they cannot do that because it is NOT considered pre-tax by the IRS. They are charitable contributions, not business expenses, so cannot be used to reduce self-employment income either. | |
| 21 May 2008 | |
| First off, he is probably being incorrectly treated as an I/C and should be treated as an EE. (Not in all cases, but in most).
Secondly, his charitable deductions are a Sch A not a Sch C deduction. http://www.taxalmanac.org/index.php/Discussion:Clergy_Tax_Return_-_charitable_contributions/widow%27s_compensation There are numerous discussion here about clergy taxation. Try a search in the yellow box to the left. | |
| May 21, 2008 | |
| See Minister / Clergy Taxation. | |
| 21 May 2008 | |
| The tithing is a charitable deduction. The 1099 goes on sched c. SE tax has exceptions for clergy. Some take it, while others don't.
As for being an I/C or an EE depends on the situation and the contract signed. Some clergy are considered to be an EE, while others are considered self-employed. | |
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