ari Posted March 31, 2013 Report Share Posted March 31, 2013 same lady as my last question got 3000 in wages none of this was subj to soc sec or med she's a minsiter in christian science Never worked on a minister before Woudl anyone know if i have to file this form 4361? Quote Link to comment Share on other sites More sharing options...
JJStephens Posted March 31, 2013 Report Share Posted March 31, 2013 Your post doesn't really have quite enough info to give specific suggestions. Here's some general info that might be helpful. Clergy have dual tax status--that is, they are almost always considered a employee for income tax purposes but are always (100% of the time) considered self-employed for social security tax purposes. Therefore, their employing church should not withhold SS or Medicare tax on their salary. They to, however, have to pay self-employment social security tax on their earnings (including housing allowance) unless they 'opt out' by filing Form 4361. Use the clergy worksheet to determine the amount subject to SECA tax. Form 4361 can be filed by clergy with a deeply held religious conviction that it is inappropriate to receive govt benefits (e.g., social security benefits) related to their service as a clergy person. The deadline for filing is the due date of the second tax return on which the person has at least $400 of clergy-related earnings. Hope this helps. If I misunderstood your post, perhaps you could give a little more info. 1 Quote Link to comment Share on other sites More sharing options...
Guest Taxed Posted March 31, 2013 Report Share Posted March 31, 2013 Clergy have dual tax status--that is, they are almost always considered a employee for income tax purposes but are always (100% of the time) considered self-employed for social security tax purposes Is that really true? I do returns for 2 separate church pastors and their church witholds ss tax just like a regular employee? Then I have one more that does not have ss witheld. I am not sure if the denomination makes any difference but the 2 that withold ss are baptist and the one that does not withold ss is catholic? Would love to know how the Jewish, Muslim and Hindu faiths deal with this issue with their priests and rabbis? Quote Link to comment Share on other sites More sharing options...
ari Posted March 31, 2013 Author Report Share Posted March 31, 2013 Your post doesn't really have quite enough info to give specific suggestions. Here's some general info that might be helpful. Clergy have dual tax status--that is, they are almost always considered a employee for income tax purposes but are always (100% of the time) considered self-employed for social security tax purposes. Therefore, their employing church should not withhold SS or Medicare tax on their salary. They to, however, have to pay self-employment social security tax on their earnings (including housing allowance) unless they 'opt out' by filing Form 4361. Use the clergy worksheet to determine the amount subject to SECA tax. Form 4361 can be filed by clergy with a deeply held religious conviction that it is inappropriate to receive govt benefits (e.g., social security benefits) related to their service as a clergy person. The deadline for filing is the due date of the second tax return on which the person has at least $400 of clergy-related earnings. Hope this helps. If I misunderstood your post, perhaps you could give a little more info. good info..many thanks..interesting..i have never come across this before. thanks again, ari Quote Link to comment Share on other sites More sharing options...
J. Ron Posted March 31, 2013 Report Share Posted March 31, 2013 jjstephens is right. The minister has a dual tax status. If a church has withheld SS and medicare and paid matching funds they are wrong. You need to use the clergy forms to properly calculate their clergy taxes. Yes, Taxed, it is true. Denomination makes little or no difference. You must include the clergy housing (rental value of the parsonage, or the housing allowance) to properly calculate the SS and Medicare tax. Richard Hammar and B.J. Worth have excellent books on the subject that are worth buying and reading if you are going to do clergy taxes. Hammar's book is more detail in its subject matter. Worth's book is written in simpler terms and easier for the average person to understand. Quote Link to comment Share on other sites More sharing options...
Guest Taxed Posted March 31, 2013 Report Share Posted March 31, 2013 So if a Church has traditionally witheld ss and medicare taxes from clergy wages just like regular employee, what do they have to do to get the taxes refunded (beyond the 3 year period)? In my case the Church secretary does the payroll because the W2s are always typewritten. What a mess?? Quote Link to comment Share on other sites More sharing options...
David1980 Posted March 31, 2013 Report Share Posted March 31, 2013 So if a Church has traditionally witheld ss and medicare taxes from clergy wages just like regular employee, what do they have to do to get the taxes refunded (beyond the 3 year period)? In my case the Church secretary does the payroll because the W2s are always typewritten. What a mess?? Are they ministers with the church or just other employees? Quote Link to comment Share on other sites More sharing options...
J. Ron Posted April 1, 2013 Report Share Posted April 1, 2013 To make proper corrections, the easiest way is for the church to agree to raise the clergy pay by their matching amount. Then the church needs to file a 941x with the proper figures, a W-2c and W-3c and the returns should be amended to show the proper figures. Doing it this way will give the clergy credit for the church portion, the church will not need to file for a refund, and the amended return will show the proper SE income. If the church wants the money refunded they can use the 941x to request it. It is far easier to move the withholdings from SS and Medicare tax withheld to the withheld tax line. The clergy wages would need to be raised to the level of the the matching portion. Quote Link to comment Share on other sites More sharing options...
Guest Taxed Posted April 1, 2013 Report Share Posted April 1, 2013 Sounds complicated and I seriously doubt the church secretary ( a part time worker) will be able to do all this. Plus the fact that the clergy wages would need to be increased. That has its own issues! I think the secretary may say, just keep on doing what we have been doing so far. If the good lord wants us to change the IRS will come knocking! Quote Link to comment Share on other sites More sharing options...
JohnH Posted April 1, 2013 Report Share Posted April 1, 2013 Wonder what the Good Lord would think of her sloppy approach to financial stewardship. Quote Link to comment Share on other sites More sharing options...
Christian Posted April 1, 2013 Report Share Posted April 1, 2013 I have a relation who receives a salary and housing allowance as a minister. I report the combined figure on Schedule C-EZ and deduct the housing allowance on line 21 of Form 1040. Thus he pays SS and medicare taxes on both but only income tax on his salary. Quote Link to comment Share on other sites More sharing options...
Guest Taxed Posted April 1, 2013 Report Share Posted April 1, 2013 Wonder what the Good Lord would think of her sloppy approach to financial stewardship. The Good Lord gave her the brain and intelligence that she is using to do church payroll. If the Lord wants her to change now Lord please give IRS a call! (Just kidding, I really don't want to offend any religious sentiments. It has been a long Monday!) Quote Link to comment Share on other sites More sharing options...
J. Ron Posted April 2, 2013 Report Share Posted April 2, 2013 I have a relation who receives a salary and housing allowance as a minister. I report the combined figure on Schedule C-EZ and deduct the housing allowance on line 21 of Form 1040. Thus he pays SS and medicare taxes on both but only income tax on his salary. You really need to use the Clergy forms to properly calculate the return. Then you would not even use Sched C-EZ. Quote Link to comment Share on other sites More sharing options...
JJStephens Posted April 2, 2013 Report Share Posted April 2, 2013 So if a Church has traditionally witheld ss and medicare taxes from clergy wages just like regular employee, what do they have to do to get the taxes refunded (beyond the 3 year period)? In my case the Church secretary does the payroll because the W2s are always typewritten. What a mess?? What a mess--well said! Fixing it is a bit of a hassle. On the other hand, most church bookkeepers don't have the ability or inclination to handle it so it might become a new engagement for you. Clergy taxes are my specialty. I run into this situation at least half a dozen times every year. I've written a paper that explains the issues and the correction process. If you PM me I'd be happy to send a copy of it to you. The bottom line is that they have to file Forms 941X for each quarter in error to recover the SS taxes paid in error (a portion of which MUST be refunded to the employee) and must also issue corrected W2s/W3s. That will likely also result in amended personal tax returns for the affected clergy taxpayers. Quote Link to comment Share on other sites More sharing options...
ari Posted April 4, 2013 Author Report Share Posted April 4, 2013 Question if I may....i have a w2 for $3,300 in box 1 wages. There is nothing in box 3 or 5. On Form 4361do I just complete section 1 and section 2. Do I need to complete item 3 and 4? I'm efiling this return if that matters at all. Thank you, Ari Quote Link to comment Share on other sites More sharing options...
MAMalody Posted April 4, 2013 Report Share Posted April 4, 2013 ari, you have two unrelated items there. On the W-2 for clergy, boxes, 3, 4, 5, and 6 should always be blank. I don't remember Form 4361 as being able to be e-filed due to the fact that you need an original signature. I usually have the applicant fill out the form to ensure they actually read it and understand what it says. Remember the statement above. <<<Form 4361 can be filed by clergy with a deeply held religious conviction that it is inappropriate to receive govt benefits (e.g., social security benefits) related to their service as a clergy person. The deadline for filing is the due date of the second tax return on which the person has at least $400 of clergy-related earnings.>>> This is NOT an economic decision. Quote Link to comment Share on other sites More sharing options...
ari Posted April 4, 2013 Author Report Share Posted April 4, 2013 so if you have a w2 with a minister, no need to file 4361? Quote Link to comment Share on other sites More sharing options...
JohnH Posted April 4, 2013 Report Share Posted April 4, 2013 You need to read up on the 4361, including the timing and conditions under which it is filed. It's all right there in the instructions and in the statement that the signer is making. Listen to what what Mike just told you. The 4361 is not even a part of a tax return. http://www.irs.gov/pub/irs-prior/f4361--2011.pdf Quote Link to comment Share on other sites More sharing options...
ari Posted April 4, 2013 Author Report Share Posted April 4, 2013 gotch ya...many thx Quote Link to comment Share on other sites More sharing options...
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