The Pastor and His Income Tax - ssfoundation.net

1 The Pastor and His Income TaxFor 2017 Tax YearCourtesy ofJAMES W. RICKARDP lease NoteYou must completely fill out the Tax Data Questionnaire (green sheets).Please send your information to us as soon as possible in the tax year February or early in March would allow us to help more pastors. See page 3 for Stewardship Services Foundation21726 Placerita Canyon RoadSanta Clarita, CA 91321(661) 362-2 TAX (362-2829)Website: : HistoryTo those who are new to our mailing list, our ministry began in richland ,Washington, in 1977 as The Columbia Pacific Foundation. Because of the increasein demand for our services, we relocated to Newhall, California, in 1987 andchanged our name to The Stewardship Services Foundation.

2 Over the past threedecades, the ministry has grown to include the following services for pastors andtheir churches: Federal and State Income Tax Preparation Clergy Tax Seminars Family Finance Seminars Estate Planning (Will) Seminars Church Leadership and Church Finance SeminarsSeminars AvailableThe Pastor and His Income Tax. Designed for pastors. Covers such topicsas the 1986, 1990, 2000, 2003, and subsequent Tax Reform Acts and theirimpact on ministers, the parsonage or housing allowance exclusion, professionalexpenses (why you should be reimbursed), salary packages, retirement plans,employee versus self-employment rules and record keeping requirements.

3 Matt. 22:21bChurch Leadership and Finance. Designed for elders, deacons, trustees,administrators, finance committee members, etc. Addresses such matters asprotecting the integrity of the church, qualifications for leadership, generatingbudgets and reports, filing correct tax forms, developing salary packages, settinggoals and objectives, record keeping requirements and principles of praying for,protecting and paying the pastoral staff. 1 Tim. 3:1 7 Family Finance. Looks at the biblical principles of money focusing on fiveconvictions and fourteen key financial principles. Offers practical counsel on howto make good financial decisions and how to handle debt.

4 Also gives helpful infor-mation concerning budgets, life insurance, credit cards a great tool or a terriblemaster buying automobiles, prepaying a home mortgage, retirement planning,and numerous examples of real-life situations. 1 Cor. 3:18 4:2 Biblical Stewardship. Selected texts for the Sunday morning worshipservice centered around the three convictions of Biblical Stewardship which webelieve are the cornerstone principles. Matt. 6:19 24 Estate Planning. Provides practical help in estate planning and making a willor revocable living trust. Covers basic terminology, guardianship, joint tenancy,probate, the dangers of dying intestate (without a will) and a checklist for thesurviving spouse.

5 The information shared will also be helpful in reviewing the willyou may already have. 1 Tim. 5:8 The Stewardship Services FoundationThe best time to call the office:January 3 April 15, 2018 Monday Friday, 8:00 5:00 PSTA pril 25 December 30, 2018 Tuesday & Thursday, 9:00 11:00 PSTI ntroductionOne of the objectives of The Stewardship Services Foundation is to provide taxcounseling and preparation services without charge to the conservative evangelicalChristian community. Our duty as individual Christians is to use wisely that whichthe Lord gives us. As a steward of God, the success or failure you have with themoney God gives you will greatly affect your testimony for Jesus Christ.

6 Thatincludes paying Uncle Sam that which we owe him. 1 Cor. 4:2 There are only three requirements you must adhere to in order for The StewardshipServices Foundation to prepare your 2017 tax return: 1. You mustuse the tax data questionnaire from the center of this booklet or our You musthave Income from the ministry and be a member of a churchthat agrees with our doctrinal statement. You can find our doctrinalstatement at: We prepare returns year-round, but if you wish to ensuremeeting theApril 15 deadline we need your information by March should be noted that this booklet is designed solely as a general guide. The taxlaws are often complex and subject to different interpretations.

7 It will be most impor-tant to check for any changes in interpretations, rulings or technical corrections to bemade by Congress and/or the IRS. We trust that you will feel at ease in contactingour office for tax counsel or assistance in preparing your tax InformationBenevolent gifts from church funds to needy families are not taxable unless the giftis to an employee of the are never professional expenses (Section 162(b)).The 2017 mileage rate for professional automobile use is $.535. 2018 due dates for estimated taxes. April 17; June 15; September 17; January 15 or February 1, 2019, if tax return is completed and filed at the same Ruling IRC-265 Professional Ministerial ExpensesOnly Partially DeductibleIn January of 1990, the IRS took another step toward reducing the amount ofprofessional expenses ministers can deduct on their tax returns; expenses such asautomobiles, books, periodicals, conferences, office supplies, telephones, etc.

8 Itinvolves a case known as the Dalan Case. In effect, the IRS ruled that, beginning in1988, ministers would not be able to deduct all of their professional expensesbecause of earning non-taxable Income . For example, the Housing Allowance: Pastor Smith earns $60,000 per year of which $24,000 is housing allowance. Hisprofessional expenses amount to $6,000 for the year. Since forty percent of hisincome is non-taxable ($24,000 divided by $60,000), $2,400 of his expenses arenon-deductible ($6,000 x 40%). If Pastor Smith is reimbursed by his church forprofessional expenses, then the Dalan ruling has no effect on the minister. TheDalan ruling also applies to a minister s Schedule C Tax Rate (Social Security) Self-Employment rate for ministers is computed by taking total Income paid toyou as salary (including housing allowance), subtracting deductible professionalexpenses (including travel expenses) and multiplying the result by.

9 9235 and thattotal by Ruling Regarding Pastors Dual Employment StatusAccording to IRS Publication 517, pastors of churches are employees for federalincome tax purposes and self-employed for Social Security (SECA) purposes ( ,dual-status employees).The IRS states The church is required to issue a W-2 whether Income tax was withheld or not withheld. The IRS is enforcing this requirement. What does itmean?1. Churches must issue a W-2 to their The church must notwithhold Social Security and Medicare taxes from thepastor s wages. He is self-employed for Social Security The minister must pay quarterly on form 1040-ES or have Income taxwithheld by the church (also see bottom of page 8).

10 4. If the church pays any wages (do not include housing allowance) a 941quarterly tax report must be filed with the Professional expenses related to the minister s W-2 Income must bereported on Form 2106 and Schedule A of Form 1040 unless reimbursedby the Income and expenses related to funerals, baptisms, marriages, and otherspeaking engagements are still reported on Schedule C of Form is an employee?When the church hires and pays someone to perform services: secretaries, janitors,babysitters, gardeners, etc., they are not independent contractors, they are youremployees. You must withhold and match FICA and issue them a W-2. IRS publica-tion 15, page 3 defines who is an evangelists or special speakers that are guests of your church wouldrequire a 1099-MISC if the honorarium paid to them was $600 or more.