After I heard Bart's preacher story a few weeks ago, I knew it would eventually find its way to the message board. The software post today finally woke up our Southern literary comrade, and sure enough Armando was there to receive his first swing.
Sorta reminds me of a rodeo in my hometown where a bunch of good ol' boys locked a friend in a Port-a-Potty and rolled it down the hill. When they unlocked it, the occupant come out swinging at the first guy he saw! Yes, we do have fun in the south, right Bart??
At any rate, what about Bart's preacher? Among my most miserable clients who file a 1040 are preachers. Think about it. Only the huge churches actually run a payroll. Most preachers go all year with no withholding, no social security, as the church is effectively exempt from both. The preacher thus has to face his income tax and BOTH HALVES of his social security at the end of the year with no withholding.
Would love to hear from Rev. Billy Robertson, the Chief, on this one.
Just how much can we use Schedule C to our advantage? According to the IRS, not much. They consider all the money received from the church as employee income, same as W-2 compensation except no withholding and no SS. Only "outside" income collected from parties other than the chuch goes on Schedule C - weddings, funerals, revivals, etc.
A part of the money is supposed to be a parsonage allowance, and (you guessed it) the churches don't have any idea how much to allow, and most of the time the preacher's tax preparer has to split out the receipts based on fair rental value.
The expenses for Preachers are substantial, and this is a shame because if you follow the IRS instructions, first they must be reduced by the 2%, and then can benefit part of the excess ONLY if they itemize on Schedule A. Any expenses deductible on Sch C can bring dramatic results, compared to their value on Schedule A.
As for my clients: I deduct every conceivable expense on Sch C except Contributions. This means the mileage for his visitation duties, extra driving for church functions, overnite travel for youth groups, etc. I realize this is "pushing the envelope" more than IRS would like, but as long as the preacher can show just a modicum of revenue on the Sch C, I will take these expenses. I will not, however, take Contributions as these are not ordinary and necessary business expenses, period. If the preacher considers the collection plate as "priming the pump" I think he is wrong on more than one account.
If the preacher tells me he has no revenue (weddings, funerals, honoraria, etc.) to report on Schedule C, I tell him he has no avenue to deduct expenses other than Sch A, and he will probably pay the maximum tax.
Anyone else got idears?
Sorta reminds me of a rodeo in my hometown where a bunch of good ol' boys locked a friend in a Port-a-Potty and rolled it down the hill. When they unlocked it, the occupant come out swinging at the first guy he saw! Yes, we do have fun in the south, right Bart??
At any rate, what about Bart's preacher? Among my most miserable clients who file a 1040 are preachers. Think about it. Only the huge churches actually run a payroll. Most preachers go all year with no withholding, no social security, as the church is effectively exempt from both. The preacher thus has to face his income tax and BOTH HALVES of his social security at the end of the year with no withholding.
Would love to hear from Rev. Billy Robertson, the Chief, on this one.
Just how much can we use Schedule C to our advantage? According to the IRS, not much. They consider all the money received from the church as employee income, same as W-2 compensation except no withholding and no SS. Only "outside" income collected from parties other than the chuch goes on Schedule C - weddings, funerals, revivals, etc.
A part of the money is supposed to be a parsonage allowance, and (you guessed it) the churches don't have any idea how much to allow, and most of the time the preacher's tax preparer has to split out the receipts based on fair rental value.
The expenses for Preachers are substantial, and this is a shame because if you follow the IRS instructions, first they must be reduced by the 2%, and then can benefit part of the excess ONLY if they itemize on Schedule A. Any expenses deductible on Sch C can bring dramatic results, compared to their value on Schedule A.
As for my clients: I deduct every conceivable expense on Sch C except Contributions. This means the mileage for his visitation duties, extra driving for church functions, overnite travel for youth groups, etc. I realize this is "pushing the envelope" more than IRS would like, but as long as the preacher can show just a modicum of revenue on the Sch C, I will take these expenses. I will not, however, take Contributions as these are not ordinary and necessary business expenses, period. If the preacher considers the collection plate as "priming the pump" I think he is wrong on more than one account.
If the preacher tells me he has no revenue (weddings, funerals, honoraria, etc.) to report on Schedule C, I tell him he has no avenue to deduct expenses other than Sch A, and he will probably pay the maximum tax.
Anyone else got idears?
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