I have just completed a return with a 2106 worksheet for a member of the clergy. Last year I E-filed the return and then mailed the worksheet with the 8453. My software this year says a return with this worksheet is not eligible for electronic filing. I found a short discussion on this in an earlier thread but it was mainly about software that was not even preparing the form. Tax Slayer has prepared the form, but tells me I cannot Efile. Anyone else have any experience with this? Just wondering if the IRS is not allowing this form to be E-filed or if it's Tax Slayer that is not allowing it. I have checked the IRS website and can't find anything there either.
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1 April
I'll admit I didn't pay a lot of attention since I don't have any clergy clients now, but I just noticed a post about not being able to e-file clergy worksheets until 1 April. Think it's an IRS thing, but could be software specific. -
I am not sure what the issue is, however, it seems the worksheet the IRS uses for computation of the IRC 265 limitation (Deason rule) has not been approved or programed into their computers yet - at least for some software and they have announced that they are not processing those returns until after 30 March.
I am not sure you would want to do this, however, if you prepare the return correctly without use of that form you may be able to e-file it immediately...but with Tuesday being 30 March why try a workaround. It could potentially cause other problems because last year you sent the worksheets in with Form 8453 to confirm the return (although when I talked to them over the phone I was told they were doing nothing the forms) and this year apparently they are working solely with the transmitted data and worksheet. Without the worksheet available I am not sure what they would.Comment
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Oh, thanks so much. I can wait a couple of days. Mailing the federal is really not a problem anyway as they owe, but they have a state refund that they want to use towards paying what they owe on the federal and Kentucky has been getting them back by direct deposit in about a week when E-filed so in order to E-file the Kentucky and get that refund back I have to E-file the federal. I have to prepare the worksheet as I can't correctly prepare the return without it. We'll just wait a few days. This is great news.Comment
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A couple of questions...
As I recall, you specialize in church/clergy returns, so...
Is this "Deason rule" referring to something about the housing allowance? If not, then what?Originally posted by MAMalody View Post
Checking the list of acceptable documents that may be mailed in with an 8453, I didn't find the worksheets you mention. Will they take them with it anyway? Have you sent some in previously with no complaints or kickbacks?Originally posted by MAMalody View Post
Thanks.Comment
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Not an expert and I don't know the answer to your first question, but as far as the second question, in previous years it was on the list of acceptable documents that could be mailed in.Originally posted by Black Bart View PostComment
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IRC 265 Limitation/Deason Rule
If you receive a rental or housing/parsonage allowance that is tax free, then you must a portion of your unreimbursed professional expense to that exempt income and exclude that portion from your professional expense deduction. This reduction does not apply to the computation of your SE taxes.
For example, if a pastor only received a housing allowance and all of it was exempt from income tax, then he would not have a professional expense deduction because 100% of his clerical income was not taxable. In computing the SE tax, he would still be able to reduce his housing allowance by the unreimbursed professional expenses even though he had no deduction for them.
The formula for computation would be:
{tax free housing allowance} divided by {all income (taxable and tax free)earned from the ministry.}
I would be happy to answer any questions you may have directly if you contacted by at ClergyTaxes@aol.com. You should be aware that if you contact me directly you will lose the benefit of peer review that this board makes available.Comment
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