2 problems - retirement plan contrib'n, clergy

[Lynn EA USTCP in Louisiana]

I use ATX. This return is MFJ, husband is a partner in a law firm and the wife has 2 career focuses - one as a cantor (clergy) and the other as a music teacher at a private company. The wife receives W-2's for cantorial duties and a 1099-MISC for the work as a music teacher.

First problem - calculating husband's retirement plan contribution:

Husband's K-1 reflects retirement plan contribution of $72,000 (k-1 line 1 income is over $550,000). The retirement plan info does not flow from the k-1 to line 28 on the 1040. I tried doing the calculation within line 28, (s-e SEP, Simple and qualified plans) and it limits the amount to $49,000 so I figure I must have one or more of the parameters set incorrectly.

Second problem - calculating SE tax for the wife. Will the wife need 2 separate SE forms? With just one it just doesn't flow correctly. Or do I use one and do manual overrides to make it come out the way it should?

Thanks for all responses,

Lynn Jacobs, EA

[Lynn EA USTCP in Louisiana]

Well, I solved the first problem re the retirement plan calculation. I entered the info manually as a defined benefit contribution and it calculated correctly.

Now on to solve the SE issue for the wife. If anyone (MAMalody, for instance) has some words of wisdom I'm all ears; if a phone call works for you 504-469-1025 or email [email protected]. Thank you,

Lynn Jacobs, EA

[Margaret CPA in OH]

Confirm type of retirement plan law firm has. Could it be defined benefit or non-qualified?

When I had some clergy clients a few years ago either before clergy worksheets existed or didn't work, I listed on the SE tab Business income, Salary as clergy $xx,xxx to calculate SE tax. It worked and the W-2 entry flowed fine for income tax purposes.

[Jack from Ohio]

Open the clergy worksheet. Mark her clergy w-2 as clergy in the special drop down box.

If her clergy W-2 is done correctly, there will only be numbers in box 1 and possibly box 2. If SS or Medicare withheld, then all I just told you is in vain.

[Lynn EA USTCP in Louisiana]

Yes, I have done that, notated the W2 as clergy income. Sadly, one W2 has SS/medicare withholding. That particular congregation just will NOT do it the correct way.

But the problem is that the 'real' s/e income as a music teacher is not flowing correctly to the SE form. Do the wife need 2 SE forms? Or 'should' one SE form be able to properly calculate the combined SE tax for both the clergy and the music teacher SE income?

Thanks again, Lynn

[Margaret CPA in OH]

One SE should suffice. Have you double checked that the box at the top of Sch C is marked for spouse (assuming she is spouse on this return) and Box 7 has the correct form to flow to (Sch C)? Next try maybe deleting clergy income, see what SE pops up (should be music), add in clergy data and, if needed, type in the clergy wages as you have done before. Maybe sequence matters even if it shouldn't. Good luck!

[MAMalody]

My guess is that the 1040Clergy worksheet #4 is not picking up the Schedule C income correctly. You may simply enter the figure there and that should take care of the SE.