$108.28

[Don B]

Just curious. What is the reason for the $108.28 behind the SE for church employees.
Why not $108.00. Does anyone know the reason behind this please.

Don

[Jiggers]

Huh?

'splain yourself!

I don't understand the question.

[Don B]

Well, please excuse me. Its not important at all. I was just wondering where the IRS came up with the figure of $108.28 for the line on figuring SE tax on church employees.

[Bird Legs]

Church Empl;oyees

Did not realize that church employees were subject to S E Tax. They arre subject to
Social Security & M/C Tax just like any other emloyee.
I am with Jiggers. Where is this 108.28 figure? What line of the form 941 is it on?

[Gene V]

I think Don is talking about the number on Form SE and the instruction.

Who Must File Schedule SE
You must file Schedule SE if:
c You had net earnings from self-employment from other than church employee income (line 4 of Short Schedule SE or line 4c of
Long Schedule SE) of $400 or more, or
Exception. If your only self-employment income was from earnings as a minister, member of a religious order, or Christian Science
practitioner and you filed Form 4361 and received IRS approval not to be taxed on those earnings, do not file Schedule SE. Instead,
write “Exempt–Form 4361” on Form 1040, line 58.
c You had church employee income of $108.28 or more. Income from services you performed as a minister or a member of a
religious order is not church employee income (see page SE-1).
Note. Even if you had a loss or a small amount of income from self-employment, it may be to your benefit to file Schedule SE and
use either “optional method” in Part II of Long Schedule SE (see page SE-3).

[Black Bart]

????? It's a mystery.

Don B.'s uncovered a question that's been laying right out in the open and everybody just walks around it (good catch, Don). Then Gene shined a light on it for us -- I remembered reading that figure before, but couldn't recall where.

Hmmm; now that is a strange thing. You know that no bureaucrat went to the trouble to sit down and pluck it out of the air; saying "Okay, we'll peg this at what?...Oh, maybe $108.28." For sure they'd have said $100, so it's gotta be related to...what?

We should offer a prize for the boarder solving this one.

[Corduroy Frog]

Strange Indeed

Some myths exist with respect to this:

1) A church employee is NOT the preacher. (See instructions for SE). They are
paid secretaries, caretakers, etc.
2) The reason these people are self-employed are because the IRS has chosen
NOT to tax churches (I think they would be in for a long legal battle that they would
eventually win, but they would be cast as the "villain" for millions).
If they are not going to tax the church, then they can't make the church pay the
employer's share of payroll taxes. Having said that, they go after the employee
instead for both halves of the FICA/medicare.
3) Some churches have voluntarily chosen to pay these payroll taxes, so that their
preachers and other employees do not have to deal with both halves.

Don't know about the $108.28, but I would venture that this is a calculated number based on a
qualifying threshold from the Social Security Administration.

Even though you don't hear much about churches not paying payroll taxes, there is a groundswell
of support from atheists, agnostics, local politicians, and local planners to start making churches
pay property taxes. I would predict we will begin seeing this on the local level before we see
taxation by the IRS. A stoic structure downtown that could never be built in today's dollars is almost
too much for these vultures to resist.

Chief, are you out there?? What about it, Mike Malody?

"The more things change, the more things stay the same" - C. Frog

[JG EA]

$108.28 x 6.2%= 6.71
$108.28 x1.45%= 1.57
$108.28 - 6.71 - 1.57= $100.00

Someone wanted to give them a round number and grossed up the payroll. (It happens with a bonus check requested for an exact number.)

[Black Bart]

One gold star

$108.28 x 6.2%= 6.71
$108.28 x1.45%= 1.57
$108.28 - 6.71 - 1.57= $100.00

Someone wanted to give them a round number and grossed up the payroll. (It happens with a bonus check requested for an exact number.)

for poster JG EA. Uh, no, wait a minute (I'm behind the times); it's one happy face nowadays isn't it?

That's the nice thing about this board -- somebody usually knows the answer to these brainteasers.

[Don B]

Thanks all,

I guess this makes sense. At any rate I don't think there will be many employees, church or otherwise that will be affected by the figure.

Don

[DaveO]

Taxation of Churches

Even though you don't hear much about churches not paying payroll taxes, there is a groundswell
of support from atheists, agnostics, local politicians, and local planners to start making churches
pay property taxes. I would predict we will begin seeing this on the local level before we see
taxation by the IRS. A stoic structure downtown that could never be built in today's dollars is almost
too much for these vultures to resist.

[/I]

This topic might deserve a thread of its own. The downtown structures are one thing. In my neck of the woods huge "super churches" are consuming 50 or 60 acres of prime real estate along main city streets. They have concert halls into which they book concerts open to the public (for an admission fee, of course). They host conventions and events with no connection to the church other than perhaps some members in attendance. All the while they are competing with private, tax paying, venues. The resulting increases in property tax to make up for the annual shortfall amounts to a subsidy from the un-churched to the church goers. As budgets tighten I'm sure this topic will move to the front burner in many towns.

[Luis Mopeo]

Actually, it's the computation that figures in the "net income from self-employment."

When you go to Schedule SE, you take the net profit from Schedule C (or other SE taxable source) and you multiply it by 92.35% to arrive at net income from self employment. That's the number you pay 15.3% on.

The threshhold for church employees is $100, the general threshold is $400.

As was noted previously, $108.38 x .9235 = $100

It's the same as saying that you owe SE tax on Schedule C income once your net profit reaches $433.13, although most people say "you owe if your income is over $400.".

$433.13 x .9235 = $400

[Corduroy Frog]

Dave-O

DaveO, good points in your response. The arguments on both sides are often overblown and not realistic. For example, in most of the places I've lived, the "private" venues that churches compete with are nothing more than state or local buildings, such as Cobo Hall in Detroit, Tennessee Center for the Performing Arts in Nashville, or Cleveland Symphony, Municipal Auditorium (many cities), who don't pay these taxes either. In many cases, state agencies also co-sponsor the events, so that the ticket price even avoids sales tax.

If you wish, you might wish to start a separate thread on the tax issues. If so, let's stay on focus and not let the conversation fall into religious demagoguery versus anti-Christian-at-any-cost mindsets.

[taxmandan]

Not just churches dodge the prop tax

In our state, farmland is removed from the tax rolls, and in my county 65% of the land is in "farm deferral" so the churches aren't the only entities that don't pay their fair share. And the farmers are in it to make a profit and they clog up the infrastructure with their slow, lumbering farm tractors. Roads they avoid paying for by using off-road fuels and property tax avoidance. (Sorry for the rant, it's August and if I get stuck behind another combine this afternoon, I'll have to go to church to apologize for the evil thoughts) 8^ {

Now don't tell me to appreciate the farmers feeding us, around here they grow grass seed to plant lawns in Californica.

[Joe Btfsplk]

Churches and Farmers

Both churches and farmers are political sacred cows. Anything that would raise their taxes would bring a political backlash block vote which might cost any legislator who voted for such a tax increase a lot of votes.

Many farms are actually unprofitable and even if it is not a "hobby" it is not a realistic business for many farm owners, but it is something they like to do and gives them a tax write-off every year.

Tax exemptions for a church itself is not too big a problem but if the church owns a lot of property in excess of the church building it could cost the other taxpayers a lot of extra tax.

Some tax-exempt organizations pay a PILOT (payment in lieu of taxes). I don't think churches are among those paying the PILOTs.