The #1 Tax Mistake Pastors & Clergy Make
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- Опубліковано 14 жов 2024
- Updated video here: • The #1 Tax Mistake for...
This is by far the #1 mistake I see on pastor and clergy tax returns and how to avoid it. I also briefly touch on the second most frequent mistake I see. Watch this video now to avoid this mistake and costly penalties.
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*Disclaimer: All information contained in my videos are for general educational purposes only. These videos are not meant to be used as tax advice for any specific individual, business, or other entity. You should consult with a CPA or other professional before making any decision that impacts your tax and financial responsibilities. Additionally, I am not a Certified Financial Planner and I do not give investment advice. Any information contained in my videos related to budgeting, finances, or investments are solely my opinions and are not intended to influence specific decisions you may make as it relates to your finances.
Thanks for putting this content out here. As one who is clergy and has figured this out, I wish it was discussed more and was at the forefront when people started as clergy
Thanks for the comment and for watching Tyler. I agree - this is so often misunderstood and not really explained well to new clergy.
I'm interested in hiring an accountant that actually knows what they're doing. I own three food carts and ice cream truck and a food trailer. I also recently purchased a property and put a building on it which isn't finished but will be used as a place to hold meetings as well as a commissary. I intend to use my mission to help addicts, homeless people, and Veterans find work and adequate housing but I'm not sure what to do with my taxes whether to list myself as a not-for-profit organization I'm not sure what to do
Thanks for watching and commenting. You should reach out to a CPA firm and have a consultation to discuss with them what the options are for you (preferably one familiar with nonprofits and food trucks). You can go to my website if you want to reach out to us. www.wootencpa.com
We made car payments to our retired minister's car until it was paid off. Last year we sent of a lump sum to pay it off early. Does he get a 1099 NEC for those payments... or a W2... He retired in early 2021 and we finally paid it off in 2023. Thanks
It's definitely taxable. Since it's pastoral, it's subject to SECA either way... but still best to do it right of course. If he's still the active pastor, probably a W2. Since he's retired... is he still performing services for the church or not? Probably still a W2 if he is.
I have a 1099-NEC. That's all I got, along with my wife's W-2. You sound as if pastors are supposed to have one. But I've never received one.
Hey Steve. It is possible a 1099-NEC is correct. However, most of the time you should be receiving a W2 from the church if you're a full time (or even part time) pastor on staff at one church on an ongoing basis. At the end of the day, the taxes aren't really any different, but it should be a W2. If they designate and pay MHA then that should not be included on the 1099 but you would need to include it for SECA taxes on the personal tax return.
Keep up the good work Brad!
thanks for watching!
If I have opted out of social security do I still need to put my housing allowance on the Schedule SE or schedule C?
If you opted out of Soc Sec then you won't have a Schedule SE (related to clergy wages, you may have other self employment income). Also, depending on your situation, you likely won't have a Schedule C either (related to clergy wages). I've seen where some people put their W2 clergy wages on Sch C, which is incorrect.
@@IntentionalFinance101 Thanks I appreciate the good information. Especially dealing with pastors!
Do you have a pdf worship that list the steps a treasurer should take to report wages
To irs-ssa-s state-local
Unfortunately I don't have that. You need to get with a CPA or a payroll provider who has experience with ministers and churches to make sure you get your payroll setup correctly.
How would this apply to missionaries who only receive a 1099 from a church? We would be gone 9+ months out of every year.
This doesn't really apply to a missionary receiving a 1099. As a 1099 recipient you would file schedule C and report your earnings as a self employed minister. You do not have the typical dual status of a pastor (employee for income tax and legal purposes, self employed for soc. sec .and medicare purposes) which results in a W2 instead of 1099. You would be more comparable to a typical self employed individual than a typical pastor/missionary... I'd need some more info to help you out. Feel free to check out the website and set up an appointment if you want to discuss further.
Greetings, thanks so much for making the video. It helps me.
Thanks for watching, glad the video is helpful to you.
If a church only has a minister as an employee
How often must 941 be sent
By the employer if the minister does not elect voluntarily withholding of fica /seca
2seconds señorío
If church only pays housing allowance nothing else to minister for they need to file 941 yearly or quarterly
If the church only pays housing allowance, I do not think they have to do W2s or 941s if that's the only employee. There would be no wages to report since the MHA typically goes in box 14 which is optional. It's been a while since I've done a payroll report for a church.
As for the 941... it's possible there is only an annual filing requirement of the 944
If your pastor only receives a 1099 and not a W2, but he donates back over $5,000.00 to the church, how do you report the donation?
Those are going to be separate transactions. So the income is taxable income to him. And then the donation is just like anyone else's - only a deduction his personal return if he itemizes his deductions. Better to not take the pay to begin with (for tax purposes).
Hello, question If the w2 has all the boxes filled in for boxes 1,2,3,4,5,6 and the box 14 has no housing allowance but we have a letter that says housing allowance is half of the wages. How would this be handled for 1040 and SE form
There’s a couple of issues. If there’s housing allowance then they are clergy and boxes 3,4,5,6 should be blank. Or if they are a normal employee then there’s no housing allowance.
Housing allowance does not have to be in box 14, but it should NOT be included in the amount in box 1. If it is, it needs to be amended so that box 1 does not include housing allowance. Also, housing must be designated in some sort of official minutes or memo by the governing body before it is paid.
Are you familiar with Foreign trust and the process to becoming completely tax exempt via a 508ca1 entity?
Unfortunately no. I don't do any work with foreign trust or foreign organizations. Is there actually a foreign entity? It sounds like a potential scam. I also just did a quick search and the word "foreign" doesn't show up anywhere in section 508...
@@IntentionalFinance101 no definitely not a scam my friend. You either now or you don't and that's fine. This is all related to trust as in foreign and domestic. Which an entirely different special and mainly outside of the normal dr/cr life of an accountant.
I didn't say it was a scam. Just wanted to put it out there b/c there are plenty of scams out there these days. I am not familiar with foreign entities (as I mentioned before). Sorry I am unable to help.
I wonder if church pays property taxes
Hey Ruth, thanks for watching. I believe that is state/city/county specific. But I think many times nonprofits are exempt from real property taxes.
Can The church elect to withhold all the taxes?
The church can withhold enough as federal income tax withholding to cover the taxes, but they cannot withhold and report the taxes as social security and medicare taxes.