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Preparing Minister’s Taxes

• All audio is streamed through your computer speakers. • There will be several attendance verification questions

during the LIVE webinar that must be answered via the online quiz at the conclusion to qualify for CPE.

• Today’s webinar will begin at 2:00pm EDT• Please note: You will not hear any sound until the

webinar begins.

Preparing Minister’s Taxes

Presented by: Kay K. Mortimer, EAAuthor of “Preparing Tax Returns for Ministers”

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Learning Objectives

Upon completion of this course, you will be able to:•Determine who qualifies as a minister|•Recognize the dual status of a minister•Identify the proper treatment of ministerial vs. non-ministerial employees by a church, and how to prepare their W2s•Apply the proper treatment of a minister's housing allowance on the minister's 1040•Advise your clergy clients concerning social security opt-out option•Calculate the proper self-employment tax for the minister•Advise your minister concerning his options of payment of his taxes and estimated taxes

A Minister is…

IRS definition:•“Licensed, commissioned, or ordained.” •Performs sacraments of worship

Dual-Status

Dual-status•Federal/State

• Voluntary w/h?

•SS/MC• Sch. SE

Employee or Self-Employed

W2 or 1099?Facts & Circumstances & InterpretationsExtenuating CircumstancesGeneral IRS position

Ministers vs. Non-ministers & W2

Church Payroll•Ministers vs. Non-ministers

• SS/MC issue• Voluntary withholding?• Ministers – special

• Housing• Car Allowance/Reimbursements• SS/MC

Payroll Reporting

941•Line by line•Depositing?•Checkbox?•Paying Minister’s SS/MC?

W2

Non-ministersMinisters•Box 1•Box 14•Box 2 or 12?•Checkboxes

Housing Allowance

Who qualifies?Determining amount?Board approval/acceptancePro-active not retro-active

Paying Housing

DesignatingPay FrequencySeparate check?•Separate designation

Reporting Housing - Payroll

941?SC940/SUTAW2 or statement (recommend W2-Box 14)

Minister’s Form 1040

Common with non-ministersOpt-Out:•Form 4361?

• Pros & Cons• Limited to ministerial only

1040 Considerations

Specifics for ministers•W2 – Line 7•2106

• Mileage/etc.

•Sch C•Deprec or OIH?

Other 1040 Considerations

Excess Housing•How to calculate

• Wages, Housing, Excess• Deductions allowed (2106)

•Other earnings•Clothing/Laundry?

Sch SE – line explanations

Ministers – use page 2•Form 4361?•If not, complete lines and calculate SE

Sch SE

Page 2

Paying Taxes

Voluntary withholding•Fed w/hEstimated Taxes•Calculate to cover all applicable

Retired Ministers

Form 1040 Considerations•1099R•Housing Allowances

Fringe Benefits – Basic Intro

Car AllowancesHealth InsuranceRetirement Plans

Accountable Plan

Accountable Plan recommended•Reimbursements•Ministers, non-ministers, & volunteers•Non-taxable reimbs.

Resources - Recommended

“Preparing Tax Returns for Ministers” – Kay’s bookDr. Richard Hammar’s “Church & Clergy Tax Guide” – updated annually

Recommended

Other Resources

• Learn more about Dr. Richard Hammar: http://www.churchlawandtax.com/who-we-are/advisors/richard-r-hammar.html

• www.irs.gov

Specific Resources:

Form 4361 & instructionsForm SE – p. 2 and instructionsHousing Allowance Determination SamplesCircular EForm 941 & instructionsChurch law and tax report

Questions?

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Thank you for participating in this webinar.Below is the link to the online survey and CPE quiz:

http://webinars.nsacct.org/postevent.php?id=16312Use your password for this webinar that is in your email confirmation.

You must complete this survey and the quiz or final exam (for the recorded version) to qualify to receive CPE credit.

National Society of Accountants1010 North Fairfax Street

Alexandria, VA 22314-1574Phone: (800) 966-6679

members@nsacct.org

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