Clergy Tax Facts
Most Common Errors on a Clergy Tax Return
- Used incorrect W2 income when figuring tax amount
- Not reporting nonacccountable reimbursment plans as taxable income
- Not reporting the personal use of a church-provided car as taxable income
- Reporting income incorrectly on W-2
- Omitted adjustment of one-half of self-employment tax
- Calculating clergy earned income incorrectly
- Failure to report special occasion gifts as taxable income
- Not reporting social security allowance as taxable income
- Excluding the fair rental value of the church parsonage from social security income
- Administer professional reimbursement plans incorrectly
- Reported self-employment income incorrectly
- Reporting income as a self-employed on Schedule C
- Withholding social security tax as an employee
- Not applying IRC 265 (Deason rule) on an individual tax return
- Self-employed ministers claiming exclusions only available to employees
- Claiming the housing allowance exclusion when calculating SE taxes
- "Ineligible" ministers exempting themselves from social security
- Not including parsonage allowance, fair rental value, or utilities in SE income
- Not reporting income associated with "below market interest loans"
- Not reporting a church's reimbursement of a spouse's travel expenses as taxable income
- Not claiming a parsonage allowance
- Not deducting unreimbursed and nonaccountable reimbursed expenses on Sch. SE
- Inadequate record keeping
- Not reporting honaraiums expenses correctly