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When I started working as a FA in 1992, I generated a spreadsheet which gave the cost basis information on the AT&T split up. It took me several Saturdays to complete it even though I had a book that had all the percentages. I went around to estate planning attorney's and CPAs pitching to them that we'd generate their cost basis for $200 - free if they became a client. By about 1997 it was so freakin complicated I had to give up on it. When they started buying back / merging with their own spinoffs I became lost in how to do it. The spinoffs from the spinoffs were coming so quickly I couldn't keep up.

To say that, without mentioning fear of getting sick or dying, or causing a family member to get sick or die, is leaving out the larger picture.

Needed Clarification: PPP Loans approved after June 5th have the 24 week expanded expense window. PPP Loan approved before then have the option of choosing either the 8 week or the 24 week window.

ATX does, indeed, have a proper worksheet to use for clergy called 1040 Clergy. It is pretty good, I think, and puts the right numbers in the right places. Schedule C is used when the clergy person has additional income from being a guest minister, is paid separately for officiating at weddings or funerals or other income sources not part of the salary from the church. Only those expenses related to that income are typically used to offset the income (mileage, other transportation, etc.). Typically mileage directly related to the performance of regular duties is reimbursed by the church as are other professional expenses - books, conferences approved by the governing body, etc. As ministers usually exempt themselves from SS and MC, they are subject to SE tax on the salary, any Sch. C net income, and the housing allowance. Only the housing allowance is not subject to income tax - unless there is excess. That is the minister must provide proof that the housing allowance was used in total for housing. In the case of your client, FRV means Fair Rental Value. A local realtor should be able to provide that by comparing a house of the comparable size and amenities to the market. Your client should also provide the total of the actual expenses and utilities. Actual expenses can be supplies, maintenance, telephone, cable, etc. This should exceed the housing allowance. If not, and the fair rental value does not, the excess is taxable income. I'm a long time subscriber to Church & Clergy Tax Guide, have had several clergy clients, and was church treasurer for many years. I won't say I know it all but do have resources available should you have questions. There are also a few others on this forum with a wealth of experience in this area.

Christian, the housing allowance is excluded from income tax only (unless the documented expenses are less than that amount). The allowance is included in the SE calculation unless the minister is retired. IRS 1402(a)(8); Treas. Reg. 1.1402(a)-11(a); Flowers v. Commissioner, T.C. Memo. 1991-542. As mentioned in my earlier response, "Actual expenses can be supplies, maintenance, telephone, cable, etc." That would be on line 4d. So 4a would be the allowance, say, $5000. Probably 4b is blank but you have to ask. 4d. would be as mentioned and could add up to a fair amount. 4e is pretty clear but know what all the utilities are. It's quite likely that 4f then could be $6000+. Sometimes the utilities alone could be as much as the allowance. And often the FRV of the home is much higher than either the HA or the expenses. As Lion said then see that the lowest amount is the HA making none of it taxable for INCOME purposes. If the amount is higher than the others, the excess must be included on line 1 with wages. Click on that link and you will see Non W-2 Wages, Salaries, Tips, etc. line 16 Clergy excess allowance. This has happened to my clergy clients just once. It's hard for me to imagine an NOL without a Sch. C and I don't think any unreimburse employee expenses could ever by offset by the housing allowance which is just that - for housing. It may be that the prior preparer was trying to save the unreimbursed expense deduction when 2106 went away.

There should not be a schedule C if the only clergy income was W-2 wages plus the housing allowance. The prior tax preparer may have schedule C as some sort of template or as a way to flow the HA to Sch SE depending on her software or even due to some actual income such as honoraria. Or, she may've been doing it wrong. Clergy taxes are a specialty that I've not tried. A different beast. I think of clergy taxes as kinda a backwards statutory employee, and I don't specialize in those either. But, you could have yourself a long-time client if you prepare her returns correctly. Get the resources cited above, especially any books by those three authors; take webinars; get the resources available from your client's national church. Find a mentor to point you in the right direction; it'll be worthwhile to pay for outside expertise if you gain a long-time client. If your mentor uses your software, that's even better, because some of your questions are how to do it in your software and not just tax law questions. A few tips on how to enter data and then a review at the end by an experience clergy tax preparer can give you a new client and a new niche. See what you can find for your client's church. Here's a brief page from the Church Pension Fund of the Episcopal Church that gives an overview plus a couple of publications, one specific to the Episcopal Church: https://www.cpg.org/active-clergy/learning/finance/taxes/clergy-taxes/

If you can get an idea from them when they bought it, you can often figure out what the average cost was on the Big Charts website. Sometimes it takes a little more time. But it's billable time and they can pay you or they can pay uncle sam. However, if they are a low-dollar taxpayer and they fall into a zero cap gain, then just put zero basis and move on.

I don't use that worksheet, but it appears that it is comparing the FRV from a third party with the HA voted by the church with the actual expenses (line 4f) to arrive at the lowest of those three amounts to use as the income-tax free housing allowance for tax purposes. Line 4f is his actual housing expenses. They are to compare to the other two amounts. They are NOT deducted from anything or deducted anywhere.

No to either. The old rules are return FTEs by 30 June; the new rule is by the end of 24 weeks or 31 December, whichever comes first. That could be helpful for restaurants and hair/nail salons and hotels who are not open yet or open at 25% capacity and need more time to hire (replacements for those not returning/staying on unemployment).

Margaret and Lion provided excellent additional detail on the subject. I'll just add that your nephew's then CPA you referenced was handling it incorrectly. He likely achieved the same result, so there was no negative tax consequence. But he must have been doing some sort of override of the software (unless the return was prepared by hand...).

Church & Clergy Tax Guide is by Richard R. Hammar, J.D., LL.M., CPA with Church Law & Tax.

If your client is a clergyperson in a main stream religion, the local, state, &/or national church probably has great resources, including booklets and webinars. Worth and Hammer and Geisler are excellent authors. The IRS has information: https://www.irs.gov/taxtopics/tc417 https://www.irs.gov/forms-pubs/about-publication-517

Thanks to all for the discussion. I finally chose one this morning and paid for it. It was one of those suggested by the collective members of this forum. Regards, Edsel.

You shouldn't use Schedule C to report a H&U allowance. I don't use ATX, but I'll bet it has a worksheet for properly reporting the H&U allowance. The worksheet should require you to calculate the lower of 1) Actual amount designated, 2) Amount actually paid, or 3) FRV of house (fully furnished & all utilities paid). The amount designated is then taken directly to Schedule SE, and the amount taxable (if any) is added to W-2 wages & salaries with a notation of "Excess H&U Allowance). Drake has an excellent, intuitive worksheet for this. I assume the ATX worksheet is similar in layout & function to the one Drake uses. Calculating the H&U correctly is a simple process, but not necessarily easy the first time you use it. After the first couple of run-throughs it makes perfect sense.

Yes they do...didn't you see the Oompa Loompas in Willie Wanka? They had jumpsuits and they were the same height as Catherine. I am so glad there is a continent between us right now. Tom Modesto, CA

Also, BigCharts.