by Jim Magary | Nov 10, 2015 | Tax Help
Earnings for Clergy + What is Taxable
A licensed, commissioned or ordained minister is generally the common law employee of the church, denomination, sect or organization that employs him or her to provide ministerial services.
There are, however, some exceptions such as traveling evangelists who are independent contractors (self-employed) under the common law.
If you are a minister performing ministerial services, all of your earnings, including wages, offerings and fees you receive for performing marriages, baptisms, funerals, etc., are subject to income tax, whether you earn the amount as an employee or self-employed person.
However, how you treat expenses related to those earnings differs if you earn the income as an employee or as a self-employed person.
For Social Security and Medicare tax purposes, regardless of your status under the common law, the services you perform in the exercise of your ministry are considered self-employment earnings and are generally subject to self-employment tax.
See Publication 517, Social Security and Other Information for Members of the Clergy and Religious Workers, for limited exceptions from self-employment tax.
Facts and circumstances determine whether you are considered an employee or a self-employed person under common-law rules.
Generally, you are an employee if the church or organization you perform services for has the legal right to control both what you do and how you do it, even if you have considerable discretion and freedom of action.
For more information about the common-law rules, see Publication 15-A (PDF), Employer’s Supplemental Tax Guide. If a congregation employs you for a salary, you are generally a common-law employee of the congregation and your salary is considered wages for income tax purposes.
However, amounts received directly from members of the congregation, such as fees for performing marriages, baptisms or other personal services, are generally earnings from self-employment for income tax purposes.
Both the salary you receive from the congregation and fees you receive from members of the congregation are subject to self-employment tax.
If you itemize your deductions, you may be able to deduct certain unreimbursed business expenses related to your services as a common-law employee on Form 1040, Schedule A (PDF), Itemized Deductions.
You may need to fill out Form 2106 (PDF), Employee Business Expenses, and attach it to your Form 1040 (PDF), U.S. Individual Income Tax Return.
Refer to Topic 514 for information on employee business expenses, and Topic 508 for information on the 2% of adjusted gross income limitation.
For your self-employment income (the offerings or fees you receive for performing marriages, baptisms, funerals, etc.), use Form 1040, Schedule C (PDF), Profit or Loss From Business, or Form 1040, Schedule C-EZ (PDF), Net Profit From Business, to report these earnings and related expenses.
A licensed, commissioned or ordained minister may be able to exclude from income the fair rental value of a home (a parsonage) or a housing allowance provided as compensation for ministerial services performed as an employee.
A minister who is furnished a parsonage may exclude from income the fair rental value of the parsonage, including utilities. However, the amount excluded cannot be more than reasonable compensation for the minister’s services.
A minister who receives a housing allowance may exclude the allowance from gross income to the extent it is used to pay expenses in providing a home.
Generally, those expenses include rent, mortgage interest, utilities, repairs, and other expenses directly relating to providing a home.
The amount excluded cannot be more than the reasonable compensation for the minister’s services.
If you own your home, you may still claim deductions for mortgage interest and real property taxes. If your housing allowance exceeds the lesser of your reasonable compensation, the fair rental value of the home, or your actual expenses, you must include the amount of the excess in income.
The minister’s employing organization must officially designate the allowance as a housing allowance before paying it to the minister.
The fair rental value of a parsonage or the housing allowance is excludable only for income tax purposes. The minister must include the amount for self-employment tax purposes.
For Social Security and Medicare tax purposes, a duly ordained, licensed or commissioned minister performing ministerial services is considered to be self-employed.
This means that your salary on Form W-2 (PDF), Wage and Tax Statement, the net profit on Schedule C or C-EZ, and your housing allowance less your employee business expenses are subject to self-employment tax on Form 1040, Schedule SE (PDF), Self-Employment Tax.
However, you can request an exemption from self-employment tax for your ministerial earnings, if you are opposed to certain public insurance for religious or conscientious reasons. You cannot request exemption for economic reasons.
To request the exemption, file Form 4361 (PDF), Application for Exemption From Self-Employment Tax for Use by Ministers, Members of Religious Orders and Christian Science Practitioners, with the IRS.
You must file it by the due date of your income tax return (including extensions) for the second tax year in which you have net earnings from self-employment of at least $400.00.
This rule applies if any part of your net earnings from each of the two years came from the performance of ministerial services. The two years do not have to be consecutive.
by Jim Magary | Nov 10, 2015 | Tax Help
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Were also composed of tax attorneys, CPAs as well as former state tax agents.
Once we have reviewed your current financial statement as a general rule we will tell you exactly how your case is going to close. We have worked so many cases we know the IRS and state tax tendencies.
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IRS Installment Agreements or IRS Payment Plan Agreements
Last year the Internal Revenue Service granted close to 6.5 million IRS payment plans, installment agreements and streamlined payment plans to taxpayers.
Your current financial statement will determine if you are installment agreement candidate.
Keep in mind your financial statement will need to be fully documented Bank statements and copy of all expenses. You must be able to fully verify income.
The Internal Revenue Service will conduct a full review on your financial statement.
Call us today for free initial tax consultation and we will walk you through the process to get you an IRS payment plan, installment agreement or tell you how to make an affordable monthly streamlined payment with the Internal Revenue Service.
One of the first things reduced to find out whether you can settle your tax debt for pennies on the dollar.
IRS TAX DEBT Settlements
We can also talk you about the possible tax solution of settling your tax debt through the offer in compromise program, that is settling your tax debt for pennies on the dollar.
The way you can settle your tax debt for pennies on the dollar is through the offer in compromise program.
When you call our office you will speak directly to a former IRS agent who both worked and taught the program for IRS. The writer of this blog is a former IRS agent and teaching instructor.
One of the keys to the successful completion acceptance of an offer in compromise is to understand the process.
You can follow the pre-qualifier tool on our website and you can find out firsthand if you are a qualified candidate for the program.
You should never give your money to a tax firm unless you have some assurance your offer has a chance of acceptance.
Removals and Stopping an IRS Tax Levies, IRS Bank Levy, IRS Wage Garnishments Levies
If you wish to remove an IRS tax levy will need to give IRS a current financial statement on form 433F.
IRS will require that financial statement to be completely documented and verified.
Within 24 hours of receiving your current financial statement as a general rule we can get your bank or wage levy garnishment released.
We will let you know about the IRS national standard program so you understand the process of how IRS settles tax debt.
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As a general rule the Internal Revenue Service will close no open case or module if you have not filed all your back tax returns.
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by Jim Magary | Nov 10, 2015 | Tax Help
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If IRS sends you a document it is time sensitive and taxpayers must follow-up on all time sensitive letters.
If you do not respond IRS letters, their enforcement computer will send out liens, levies, and garnishments to go ahead and get your attention.
The IRS collection computer is the largest of its kind in the world.It is a billing and enforcement machine.
The System of the IRS Tax billing Notices
Once a tax return is filed or IRS initiates a tax assessment, IRS sends out a series of five notices and those notices are sent five cycles or five weeks apart.
IRS has the option, depending on the dollar amount and the history of the taxpayer to speed up those assessments.
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The IRS Billing Notices for those that owe IRS Back Taxes:
1. CP 14 – This is the notice of balance due,
2.CP 501 – This is a Bill that you still owe tax,
3. CP503 – Important, Immediate Action Required
4. CP 504 – Urgent Notice – We Intend to Levy on Certain Assets, Please Respond Now
5. CP90/CP297/ – IRS Letter 1058 – Final Notice of Intent to Levy of Your Right to a Hearing Caution, You Must Answer this Notice
6.CP 91- CP298 -IRS Final Notice
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by Jim Magary | Nov 9, 2015 | Tax Help
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Taxpayers who owe back taxes generally can settle their case by IRS.
IRS will require a current financial statement to close your case off of the collection computer.
IRS after reviewing your current financial statement will either put you into a current hardship, asking for a monthly payment agreement or will consider the filing of an offer in compromise. Your current financial statement will completely determine the closing method used by IRS.
IRS Case Closures:
At the current time over 40% of the cases are put into a currently not collectible file, 6.5 million taxpayers have current monthly or installment agreements and 38,000 taxpayer settled by the acceptance of an offer in compromise.
Do you have unfiled or not file tax returns?
Many people do not file back tax returns because they lost their records or because of fear.
It is important to remember IRS just want you back in the system so don’t let fear or panic set in.
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Being a former IRS agents we understand all the techniques to get you back in the system worry free.
I caution those taxpayers who do not file to be very careful because IRS can file your tax return under 6020 B and you will pay the most amount allowed by law.
If you do not follow-up on the assessment IRS makes under 6020 B of the IRC code, the Internal Revenue Service will follow-up by the filing of a federal tax levy in a federal tax lien.
We will give you a free evaluation or analysis on the best way to settle your case for the lowest possible dollar amount if you are a suitable candidate for an offer in compromise.
When you call our office you will speak directly to a true IRS tax expert.
What is a Tax Levy?
A levy is a legal seizure of your property to satisfy a tax debt.
Levies are different from liens.
A lien is a legal claim against property to secure payment of the tax debt, while a levy actually takes the property to satisfy the tax debt.
Where does Internal Revenue Service (IRS) authority to levy originate?
The Internal Revenue Code (IRC) authorizes levies to collect delinquent tax. See IRC 6331. Any property or right to property that belongs to the taxpayer or on which there is a Federal tax lien can be levied, unless the IRC exempts the property from levy.
What actions must the Internal Revenue Service take before a levy can be issued?
The IRS will usually levy only after these three requirements are met:
• The IRS assessed the tax and sent you a Notice and Demand for Payment (a tax bill);
• You neglected or refused to pay the tax; and
• The IRS sent you a Final Notice of Intent to Levy and Notice of Your Right to A Hearing (levy notice) at least 30 days before the levy.
The IRS may give you this notice in person, leave it at your home or your usual place of business, or send it to your last known address by certified or registered mail, return receipt requested. Please note: if the IRS levies your state tax refund, you may receive a Notice of Levy on Your State Tax Refund, Notice of Your Right to Hearing after the levy.
When will the IRS issue a levy?
If you do not pay your taxes (or make arrangements to settle your debt), and the IRS determines that a levy is the next appropriate action, the IRS may levy any property or right to property you own or have an interest in.
For instance, the IRS could levy property that is yours, but is held by someone else (such as your wages, retirement accounts, dividends, bank accounts, licenses, rental income, accounts receivables, the cash loan value of your life insurance, or commissions). Or, the IRS could seize and sell property that you hold (such as your car, boat or house).
IRS + Unfiled Back Tax Returns + Remove Tax Levy + Stop Tax Liens + Set up Payment Plans + File Offer in Compromise
by Jim Magary | Nov 9, 2015 | Tax Help
We can resolve any IRS Tax Debt including Payroll Tax Debt. The Affordable Tax Firm, Former IRS. Since 1982.
If you owe back IRS or State of California tax debt and wish to settle your case with the IRS, call us today for a free initial tax consultation.
We are true tax experts, since 1982, with over 206 years of professional tax experience. Simply put, we know the system. when you call our office you will speak directly to a true IRS tax expert.
When you call our office you can speak directly to former IRS agents, managers and tax instructors that have over 60 years of working directly for the Internal Revenue Service in the local, district, and regional tax offices of the IRS.
Were also composed of tax attorneys, CPAs as well as former state tax agents.
Based on your set of circumstances we can accurately predict the outcome of your case, therefore planning ultimately will help the results of your case.
We have worked so many cases and understand the tendencies of the Internal Revenue Service so we can accurately predict outcomes of most cases with relative certainty.
Once we have reviewed your current financial statement as a general rule we will tell you exactly how your case is going to close.
We can review with you the best possible way to end your payroll tax problems, make an IRS payment plan, how to remove an IRS tax levy and to represent you during an IRS tax audit.
For those of you who need to file tax returns whether current or back years, call us today and we will walk you through the process of our learning experiences that total 206 years.
We can file your back or past due tax returns with little or few records. At some point in time you are going to have to file your back tax returns.
Whatever you do not be afraid to file your past-due tax returns we can get you back in the system seamlessly.
Paying IRS Back Taxes Making IRS Payments Plans = IRS Installment Agreements
Last year alone, the Internal Revenue Service granted close to 6.5 million IRS payment plans, installment agreements and streamlined payment plans to taxpayers. The IRS is the largest collection machine in the world.
Your current financial statement can impact the results of every case unless you qualify for a streamlined payment.
Keep in mind your financial statement will need to be fully documented Bank statements and copy of all expenses. You must be able to fully verify income and expenses.
The Internal Revenue Service will conduct a full review on your financial statement. You want to make sure your financial statements are both accurate and honest. IRS reserves the right to pull credit reports when necessary.
The more you all the more thorough review from the Internal Revenue Service.
IRS Settle Tax Debt
Offer in Compromise/ IRS Tax Settlements/Pennies on a Dollar Settlements
We can also talk you about the possible tax solution of settling your tax debt through the offer in compromise program, that is settling your tax debt for pennies on the dollar.
The way you can settle your tax debt for pennies on the dollar is through the offer in compromise program.
When you call our office you will speak directly to a former IRS agent who both worked and taught the program for IRS.
One of the keys to the successful completion acceptance of an offer in compromise is to understand the process.
You can follow the pre-qualifier tool on our website and you can find out firsthand if you are a qualified candidate for the program.
You should never give your money to a tax firm unless you have some assurance your offer has a chance of acceptance.
IRS TAX LEVIES
Removals an IRS Tax Levy + IRS Bank Levy, IRS Wage Garnishments
If you wish to remove an IRS tax levy will need to give IRS a current financial statement on form 433F.
IRS will require that financial statement to be completely documented and verified.
Within 24 hours of receiving your current financial statement as a general rule we can get your bank or wage levy garnishment released.
We will let you know about the IRS national standard program so you understand the process of how IRS settles tax debt.
Need to file back or past due tax returns
You could have a former IRS agent who knows the system prepare your back tax returns with little or few records.
We can help audit proof your tax return. We are tax experts for IRS tax reconstruction or IRS audit reconsideration’s.
Do not get stuck with the tax mill who have salespeople with handling of the phone.
We are A+ rated by the Better Business Bureau.
IRS Tax Help + Owe Back Payroll Taxes + Trust Fund Tax Debt + Former IRS + Payments Plan Options+ Settle Debt + Haven’t filed Back Tax Returns
