Ministerial Spouses Association
By John Mathews
In a few weeks, 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. Fill out the forms with the best counsel possible.
Here is one reason you need to be careful in filling out your tax return, if you’re married to an ordained minister of the Seventh-day Adventist Church.
Under the Federal Income Contribution Act, known as FICA code, clergy are excluded from the normal FICA definition of an employee but, instead, are included under Self-Employment Compensation Act, SECA. A SDA clergy is an employee but, at the same time, treated as self-employed for Social Security taxes. This has to do with the requirement to make quarterly payments into Social Security. Social Security tax is not withheld from the pay of clergy as done for regular employees. On the income tax side, the IRS allows self-employed clergy the parsonage exclusion that a regular employee does not qualify for.
What are some resources a pastor who is treated as self-employed can use for filing? Tom Wetmore is from the Office of General Counsel at the General Conference of Seventh-day Adventists and specializes in tax issues. I asked him for a list of his favorite resource recommendations on tax preparation for clergy.
1. His recommendation for the best resource to assist pastors in preparing their tax return is a book by Richard R. Hammer, and it is updated every year. The 2013 Church and Clergy Tax Guide 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 cheap, but it 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. See Publication 1828, Tax Guide for Churches and Religious Organizations, starting with page 19, and Publication 517, which deals with the Social Security tax requirements. These publications are the final word for your guidance.
3. There are popular software programs available in stores and online, such as TurboTax, TaxACT or the H&R Block At Home software. However, these programs 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 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 in a stack in a box. Success and God bless.
John Mathews, an ordained minister, is Stewardship director of the North American Division. John's passion is teaching stewardship principles, especially as they relate to the spirituality of money management in postmodern culture.
John is married to Janice Schram Mathews, a nurse practitioner. They have one married daughter, Angela, and are proud grandparents. He enjoyed hiking, running, playing the guitar, singing country-gospel concerts and sleeping late in the morning.