Minister's Income?

[Bees Knees]

The altrnative choice is give EAs' a housing allowance and let us exempt ourselves from fica tax.

How about we get a commission from the IRS for all the tax laws we enforce.

Just kidding...although I said that joking with a client once, and he thought I was serious. Boy did that go over like a lead balloon...

[veritas]

BTW, in my religion, we believe Jesus predicted there would be abuse. We expect to see religious hypocrisy from some claiming to be speaking for God.

Jesus said at Matthew 7:15-20, “Be on the watch for the false prophets that come to you in sheep’s covering, but inside they are ravenous wolves. By their fruits you will recognize them. Never do people gather grapes from thorns or figs from thistles, do they? Likewise every good tree produces fine fruit, but every rotten tree produces worthless fruit; a good tree cannot bear worthless fruit, neither can a rotten tree produce fine fruit. Every tree not producing fine fruit gets cut down and thrown into the fire. Really, then, by their fruits you will recognize those [men].”

Slamming Jets into skyscrapers in the name of God is a false prophet.

Preaching morality while having sex with the alter boy is a false prophet.

Lying about your religious beliefs just to save a few bucks in taxes is a false prophet.

Just because so called religious people do horrible things does not make all religion bad.

In no way do I intend to demean a person's faith. I appreciate your comments. I think I have said enough about this subject.

[OldJack]

Maybe you should check again. Ministers are treated differently than regular W-2 employees.

W-2 paid ministers get to deduct expenses as if they were reported on the Schedule C. It is a special deduction against the income reported on the Schedule SE.

OK... say the Clergy W2, box 1, shows $30,000. Now tell us how the employee (w2 )clergy deducts his unreimbursed business expenses of $5,000 and only pays income tax on $25,000. Then compare the 1099 Clergy filing 1040 Sch-C having received the same $30,000 from the church and same business expenses. If the tax return result is the same it truly would be a Miracle from God.

Don't bother telling us about FICA & SE tax as we all know and agree its the same end result.

The information in TTB page 14-5 is right out of the example presented on page 11 and 12 of IRS Pub 517. Look it up. Ministers are treated as dual status taxpayers. The Pub agrees with the court case you cited.

Exactly my point... TheTaxBook is only quoting Pub 517 and not anything else.

TheTaxBook quote implies that an Ordained Clergy cannot be an independent contractor. That conclusion is false and there are a lot of Clergy and Churches that have no intent of creating an employee/employer relationship as the Clergy considers himself working for the Lord. You also have Ordained Clergy referred to as "Missionaries" that live only from the "plate collections" received from church members where they, full time, travel conducting 2 week "revival" meetings at churches. No church considers them as employees and there is certainly no employee/employer relationship.

In these Midwestern states if you gave the employee/independent contractor test to the local clergy/church the result would be the minister is not considered an employee. Many communities in the Midwest have never seen a Catholic, Lutheran, or any of the other type churches where the Clergy answers to some higher organization or person.

TTB, page 14-4: "Ministers who are duly ordained, commissioned, or licensed by a church are treated as dual-status taxpayers. Income earned by a minister as an employee of the church is reported as wages in box 1 of Form W-2

There are 2 different things in these 2 sentences.

The first sentence is about payroll withholding and SE-tax for a church employee.
It could have also added or said "ALL income earned by an independent contractor Clergy is reported on Form 1099 subject to SE tax."

The second sentence is about "Income earned by a minister as an employee of the church is reported as wages in box 1 of Form W-2". It could have also said "if not an employee of the church", then income earned by an independent contractor is reported on Form 1099.

The reason the 1099 Clergy is not mentioned in the Pub is because the Pub is talking only about Clergy that are employees.

Your TTB quote, although true, is misleading inthat it implies that it is impossible for a Clergy to be a self-employed / independent contractor. Thus my cite of a famous court case where the IRS tried, and failed, to make a minister an employee with disallowing his business expenses.

Why would TheTaxBook ignore a court case for wording of a IRS pub? True, the Pub should be quoted, but so should the United States Court of Appeals.

[Bees Knees]

TheTaxBook quote implies that an Ordained Clergy cannot be an independent contractor. That conclusion is false and there are a lot of Clergy and Churches that have no intent of creating an employee/employer relationship as the Clergy considers himself working for the Lord.

Alright. Before we blow this way out of proportion, WHERE in the TheTaxBook does it ever say a minister cannot be treated as an independent contractor???

TTB page 14-4 TALKS about a minister receiving self employment income, and the example on page 14-5 shows income being reported on Schedule C and expenses being deducted on Schedule C.

Of course a minister COULD be an independent contractor, and TTB never says he or she can't. That's just your wild imagination blowing a sentence way out of proportion.

The subject of this thread was about a church that DID treat the minister as a W-2 employee, and how to deal with it. That’s what we were talking about. Where did I or anyone else say you absolutely could never ever treat a minister as an independent contractor?

BTW, the court case you cited never said the minister had a choice, or that working for the lord made him an independent contractor. The court looked at the facts and circumstances, just like any other employee vs. independent contractor issue. In that particular case, it happened to be an independent contractor relationship. No different than any other worker under a similar control structure.

[OldJack]

TTB, page 14-4: "Ministers who are duly ordained, commissioned, or licensed by a church are treated as dual-status taxpayers. Income earned by a minister as an employee of the church is reported as wages in box 1 of Form W-2, but Social Security tax and Medicare tax are not withheld. The earnings are not subject to employee FICA, however they are subject to SE tax. Form W-2 issued to a minister should show the wage amount in box 1 with no amounts withheld for Social Security or Medicare. Report a minister's wages on line 7, Form 1040, and also on line 2 of Part I, Section B, of Schedule SE."

Well... I am glad that we can agree that the quote only applies to those Clergy that are "employees" of the church and not all Clergy are employees. You will have to admit that many reading this post would think all Clergy might be required to receive a W2 as an employee.

I have had several tax preparers (including a CPA for a non-denominational independent church) insist that the church had to prepare a W2 for the Clergy in their church based
upon Pub 517. Maybe a quote from Pub 517 or wording similar to that in the pub as quoted below would serve TTB customers better:

Ministers
If you are a minister of a church, your earnings
for the services you perform in your capacity as
a minister are subject to SE tax unless you have
requested and received an exemption. See Ex
emption From Self-Employment (SE) Tax, later.
These earnings are subject to SE tax whether
you are an employee of your church or self-
employed person under the common law
rules.

I rest my court case.

..

[Bees Knees]

Also from IRS Pub 517, page 3:

"If you are employed by a congregation for a
salary, you are generally a common-law em-
ployee and income from the exercise of your
ministry is considered wages for income tax
purposes. However, amounts received directly
from members of the congregation, such as fees
for performing marriages, baptisms, or other
personal services, are considered self-employ-
ment income."

Yes, there are always exceptions to every rule, as your cited court case points out.

I rest my case...

[OldJack]

Also from IRS Pub 517, page 3:

"If you are employed by a congregation for a
salary, you are generally a common-law em-
ployee and income from the exercise of your
ministry is considered wages for income tax
purposes. However, amounts received directly
from members of the congregation, such as fees
for performing marriages, baptisms, or other
personal services, are considered self-employ-
ment income."

Yes, there are always exceptions to every rule, as your cited court case points out.

I rest my case...

You are correct, but as usual your emphasis/bold is in the wrong place.