Father Sheets received $40,000 in ministerial earnings; $28,000 salary for ministerial services, $2,000 for performing weddings, and $10,000 excluded parsonage allowance. Father Sheets incurred $5,000 of unreimbursed expenses connected with his ministerial earnings – $4,500 related to his ministerial salary and $500 related to the weddings performed as self-employed. How much of the expense related to his ministerial wage earnings will be deductible when figuring net income for income tax after allocation to the excluded parsonage allowance?
$5,000
$3,375
$4,500
$1,125
2
Reverend Saunders incurred $2,100 expenses in the course of his ministry in 2011, all of which were reimbursed under an accountable plan by his employing church. How much of the expenses can Rev. Saunders deduct on his 2011 tax return?
$0
$1,050
$2,058
$2,100
1
Clergy
Ministers
Christian Science Practitioners
Members of a religious order who have taken a vow of poverty.
4
Reverend Smith receives a rental allowance from her employing church. The allowance is excluded from income. She also has unreimbursed expenses from operating her ministry. Which of the following statements is most accurate?
Reverend Smith must allocate part of the expenses to the excluded allowance.
The excluded allowance covers the expenses. Nothing is deductible.
The expenses can be claimed as an adjustment to income.
Reverend Smith does not need to claim any of her income.
1
Kendra is an ordained minister; she has an approved exemption from the IRS. In addition to her duties at her church, Kendra works for wages as an umpire for a local slow pitch softball league. Her earnings from the league are:
Subject to FICA.
Subject to SE tax.
Subject to no tax. She has an approved exemption from the IRS.
Subject only to income tax.
1
Matthew is an ordained minister. His church provides him a housing allowance, all of which Matthew spends to rent his home and pay his utilities. Matthew can:
Exclude the housing allowance from net earnings for income tax.
Exclude the housing allowance from net earnings for SE tax.
Exclude the housing allowance from net earnings for all tax.
Exclude the portion of the allowance spent on utilities from net earnings for SE tax.
1
Shirley is a member of a religious order. She has not taken a vow of poverty and does not have an approved exemption from the IRS. Her earnings for qualified services are:
Subject to no tax because Shirley works for a 501(c)(3) organization.
Subject to SE tax.
Subject to FICA tax.
Subject only to income tax.
3
Annette is an ordained minister working for Blessed Church. Her earnings for services performed for Blessed Church are considered:
Wage income.
Tax-exempt income.
Self-employment income.
Unearned income.
1
Reverend Moran received a salary of $42,000 in 2011 as a full-time minister. On January 1, 2012, his church designated $12,000 of his annual salary as a parsonage allowance. How much of Rev. Moran’s salary last year is included when figuring net income for income tax?
$30,000
$36,000
$42,000
$54,000
3
Father Sheets received $40,000 in ministerial earnings; $28,000 salary for ministerial services, $2,000 for performing weddings, and $10,000 tax-free parsonage allowance. Father Sheets incurred $5,000 of unreimbursed expenses connected with his ministerial earnings – $4,500 related to his ministerial salary and $500 related to the weddings performed as self-employed. How much of the expense related to his self-employed earnings is deductible when figuring net income for income tax after allocation to the tax- free parsonage allowance?
$5,000
$500
$375
$125
3
After approval of Form 4361, how long is a minister exempt from SE tax on earnings from qualified services?
Three years from the date of the approval.
Forever. The decision is irrevocable.
Five years from the date of the approval.
Until the minister wants to reverse the exemption.
2
Like all self-employed taxpayers, self-employed clergy can deduct amounts paid for:
Medical and dental insurance and qualified long-term care for themselves only, and not for spouse or dependents.
Medical and dental insurance and qualified long-term care for themselves and spouse only, and not for dependents.
Medical and dental insurance and qualified long-term care for themselves and spouse, and their dependents.
Medical and dental insurance and qualified long-term care expenses are not deductible for clergy.
3
Reverend John receives an annual salary of $29,000 as a full-time minister and is not exempt from SE tax. This includes $3,000 designated as a rental allowance to pay utilities. His church provides him a parsonage with a fair rental allowance of $7,000 per year. How much must Rev. John include when figuring net earnings for SE tax?
$33,000
$34,000
$36,000
$39,000
3
What additional tax return preparation is needed if clergy receive a housing allowance as part of their compensation and have unreimbursed employee ministerial expenses?
The Clergy Member Income Statement must be completed to allocate expenses between Schedule C and Form 2106.
The expenses must be allocated to self-employment income and deducted on Schedule C.
Expenses allocable to excluded income must be figured to determine the nondeductible amount.
The expenses must be allocated between gross income and self-employment income to determine the deductible amount.
3
Reverend Helscher incurred $1,300 of expenses while performing wedding ceremonies as self-employed last year. On what schedule will Rev. Helscher claim these expenses?
Schedule SE
Schedule A
Schedule C
Schedule R
3
Income from what services can be exempted from SE tax?
All services performed for income by a minister.
Only services performed by a minister at a part-time job outside the church.
Only qualified services performed by a minister.
Only Interest income.
3
Which form do clergy members need to file with the IRS to request exemption from SE tax?
Form 4631
Form 4361
Clergy Income Statement
Form 517
2
Luke is an ordained minister. Luke’s salary from his employing church last year was $31,000. The church did not designate any of his salary as housing allowance. Luke spent $10,000 to rent his home last year. How much of Luke’s salary must be included when figuring net income for SE tax?
$21,000
$31,000
$41,000
$51,000
2
Reverend Isaiah receives an annual salary of $16,000 as a full time minister. This includes $4,000 designated as rental allowance to pay utilities. Rev. Isaiah is not exempt from SE tax. How much must he include when figuring net income for SE tax?
$4,000
$12,000
$16,000
$20,000
3
Reverend Nixon’s only income is his salary as a full-time minister at All Faith’s Church. In the course of his ministerial duties last year, Rev. Nixon incurred unreimbursed expenses of $4,000. On what schedule will Rev. Nixon claim these expenses?
Schedule A
Schedule C
Schedule SE
Schedule R
1