D Eckerman Posted May 2, 2007 Report Share Posted May 2, 2007 as I review prior year's Sch SE and The Ministers Guide for 2006 Income Tax - iam getting more confused! Taxpayer teaches at a Lutheran college and receives a regular W-2. However, he also receives a housing allowance of 16,200. He has self-employment income of 18,000 with expenses of 18,500 and office in the home of 350 ( as the utilities etc are carried forward as not enough income to deduct) Is the SE as simple as Sch C plus the housing allowance for SE tax? Or can he deduct his expenses for the house against it before he pays se tax? When he was a W-2 minister, I allocated etc... but now it is a little different scenario. Someone please help clarify this for me. Thank you D Quote Link to comment Share on other sites More sharing options...
MAMalody Posted May 2, 2007 Report Share Posted May 2, 2007 as I review prior year's Sch SE and The Ministers Guide for 2006 Income Tax - iam getting more confused! Taxpayer teaches at a Lutheran college and receives a regular W-2. However, he also receives a housing allowance of 16,200. He has self-employment income of 18,000 with expenses of 18,500 and office in the home of 350 ( as the utilities etc are carried forward as not enough income to deduct) Is the SE as simple as Sch C plus the housing allowance for SE tax? Or can he deduct his expenses for the house against it before he pays se tax? When he was a W-2 minister, I allocated etc... but now it is a little different scenario. Someone please help clarify this for me. Thank you D Your posting is a little confusing, however, if the school is an integral agency of a church, and it probably is, it would be able to treat an employee performing ministerial duties as a dual status minister for tax purposes and designate a parsonage allowance if it meets most of the requirements of RR 72-606 to be an integral agency of a church. RR 70-549 and RR 72-606 clearly state what is requireed to a school, mission, or other religous organizatioin to be under the control of a church and qualify as an integral agency of a church. If all qualifies, you would handle him like any other pastor. If it doesn't, the housing allowance becomes taxable. This can be a tricky area, however, my guess is, that if you contact the school, they may have documentation showing qualification, maybe even a PLA. Now, let me explain your problem, as I see it. You are indicating that he received a normal W-2, that is, one that has FICA and Medicare deducted on it. If that is the case, he does not qualify for a housing allowance because that would indicated that he does not have dual status. If the W-2 is issued in error that way, you would need to have the W-2 corrected. I do not now all the answers, however, I do specialize in clergy taxes and would be happy to help you with any questions that I can. You can contact me directly at [email protected]. You should note, that if you contact me directly, you will receive the benefit of peer review that this board makes available. I hope this has helped. Mike Quote Link to comment Share on other sites More sharing options...
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