Clergy With Another Full Time Job

[Dave T]

Not sure who is on the board this weekend so first of all Happy Mother's Day to all of you moms.

A couple of questions for those of you who are out there:

Picked up a new client this year and as it was just about time for him to leave for the Ukraine before the filing deadline we filed for an extension.

Client is a pastor of a small church and has a full time job in sales ( I guess there's some irony in there when you think about it.) Church doesn't pay him a salary but does provide him a parsonage and reimburses him for ministerial expenses, mileage, etc.

Here are the few questions I'm encountering:

1. Prior preparer never computed S/E tax on the fair rental value of the parsoange. I'ts in a fairly rural area and I know it's up to the pastor to tell me what that figure should be. When I spoke with him prior to leaving for his trip I know I really caught him off guard and as a result I know he's going to owe quite a bit as his other job dewsn't withhold enough to even over his salary there.

2. His monthly expense sheets are pretty straightforward with the exception that he's included his tithe to the church as a reimburseable expense. I think they are just shown on Sch. A and that's it. If so that would put his reimbusements greater than his expenses and the excess would go on line 21 as 'Other Income". Is that correct?

3. Finally, and this doesn't pertain to the clergy side but rather to the sales job, he receives a normal W-2 form the employer but in addition to that he gets a 1099-Misc from them that he says is for an automobile allowance. It's over $6K and I know it's income but I presume it should also be subject to S/E tax as well. Is taht corect?

Thanks for your help with this.

Dave T

[SunTaxMan]

Tomorrow ... time for pillow talk now.

[MAMalody]

Well, let's see.

(1) Check to make sure he does not have an approved Form 4361. If he does, there is no SE tax on clergy income. That would include cash salary, honorariums and housing/parsonage allowance.

(2) If there are excess reimbursements, the excess would be listed on line 7, Form 1040 along with his W-2 income. You are correct in saying that his contributions are not a business expenss but a contribution listed on Schedule A. An exception to this would be if his T/O were a condidtion of employment. I would suggest confirming that the list you were shown were actually reimbursed and not just a list supplied by him showing what he thought his expenses were.

(3) Sounds like you may need to have two Forms 2106. One for the clergy employment and one for the sales job. In that case you may be able to handle the reimbursement against those business expenses including his professional mileage.

[SunTaxMan]

One fine point. The 1099 for auto allowance is not subject to SE. It is a 2106 reimbursement as MAMalody has said. It is not compensation for services - so no SE.

[SunTaxMan]

One fine point. The 1099 for auto allowance is not subject to SE. It is a 2106 reimbursement as MAMalody has said. It is not compensation for services - so no SE.