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Tax Man Comes
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By John Mathews, D. Min

One thing that we know for certain is that every year the Internal Revenue Service will be looking for your tax return.  Don’t forget to file and remember, you do not want to be audited either, so fill out the forms with the best counsel possible. Be careful in filling out your tax return, especially as an ordained minister of the Seventh-day Adventist Church. Under the United States Federal Income Contribution Act, known as FICA code, clergy are excluded from the normal FICA definition of an employee. Instead, clergy are included under the Self-Employment Compensation Act, SECA.  Seventh-day Adventist clergy are employees, but  treated as self-employed for Social Security taxes.  Social Security tax is not withheld from the pay of clergy as done for regular employees, so there is a requirement to make quarterly payments into Social Security.  On the income tax side, the Internal Revenue Service (IRS) allows self-employed clergy the parsonage exclusion.  

  What are some resources a pastor, treated as self-employed, can use for filing?  Thomas Wetmore, a lawyer from the Office of General Counsel at the General Conference of Seventh-day Adventists specializing in tax issues, provided this list of his favorite resource recommendations on tax preparation for clergy.

1.    Richard R. Hammer’s Church and Clergy Tax Guide, updated every year, may be considered the tax Bible for clergy taxes. You can find it at www.YourChurchResource.com.  Hammer’s website also includes a newsletter that provides helpful information.  This resource is not inexpensive, but is exhaustive and covers every aspect of clergy taxes.
2.    A second source to check is www.IRS.gov.  There are a couple of Publications that have sections a pastor can consider: Publication 1828, Tax Guide for churches and Religious Organizations, starting with page 19; and Publication 517 that deals with the social security tax requirements.  These publications are the final word for your guidance.  
3.    Popular software is available in stores and online such as Turbo Tax, Tax Act or the H&R Block software.  However, they are designed for the general population, including as much of the tax law and changes as possible.  Just realize that some tax preparation software may not include every aspect needed by the clergy to fill out some of the unique forms used.

Tax season comes and goes, quicker than some of us like.  Make a copy of the parsonage expense report and update it every month so when January arrives you will have all the information on paper rather than a stack in a box.  Success and God bless.
 John Mathews, D. Min, serves as the Stewardship Director of the North American Division of the Seventh-day Adventist Church, Silver Spring, Maryland.