Is TRUMP Tax Reform good for clergymen and churches?

Is TRUMP Tax Reform good for clergymen and churches?
Posted by in Facebook's Pentecostal Theology Group View the Original Post

WHO IS A MINISTER FOR FEDERAL TAX PURPOSES?

ARE MINISTERS EMPLOYEES OR SELF-EMPLOYED FOR FEDERAL TAX PURPOSES?

The IRS has its own criteria for determining who is a Minister for Tax Purposes. The criteria the IRS uses to determine who is a minister are not necessarily the same as those used by churches and denominations. Whether or not one qualifies as a Minister for Tax Purposes
is a very important question, since special tax and reporting rules apply to ministers under federal tax law. These rules include:

  • Eligibility for housing allowances
  • Self-employed status for Social Security
  • Exemption of wages from income tax withholding (ministers use the quarterly estimated tax procedure to pay their taxes, unless they elect voluntary withholding)
  • Eligibility under very limited circumstances to exempt themselves from SECA

The new Form 1040 is different from its predecessors in several ways, including the following:

1. It is half the size of the previous Form 1040 and consists of two half-pages.

2. Health care coverage (mandatory through 2018) is reported by checking a box on page 1 (it was reported on line 61 on the 2017 form).

3. All personal exemptions were repealed after 2017, and so there is no way to claim them on the 2018 Form 1040.

4. Some lines have been consolidated. For example, several items of income, capital gains, rental income, etc., are consolidated
now from Schedule 1 and reported on line 6.

5. Wages are now reported on line 1 (instead of line 7 as in past years).

6. AGI is reported on line 7 and without detail on the form (instead of line 37 as in past years).

7. The standard deduction is reported on line 8 and is significantly larger than in 2017 ($12,000 for unmarried persons and $24,000 for married persons filing jointly).

8. Several credits are now reported on Schedule 3 and consolidated on line 12b (they were reported on separate lines in 2017).

9. Many lines in the previous Form 1040 have been deleted and transferred to various schedules. In fact, the 79 lines on the 2017 Form 1040 have been reduced to 23, a reduction of more than 50 lines.

The Tax Court test

The United States Tax Court has created a seven-factor test for determining whether a minister is an employee or self-employed for federal income tax reporting purposes. The test requires consideration of the following seven factors: (1) the degree of control exercised by the employer over the details of the work; (2) which party invests in the facilities used in the work; (3) the opportunity of the individual for profit or loss; (4) whether or not the employer has the right to discharge the individual; (5) whether the work is part of the employer’s regular business; (6) the permanency of the relationship; and (7) the relationship the parties believe they are creating. Most ministers will be employees under this test.

55 Comments

  • Troy Day
    Reply February 8, 2019

    Troy Day

  • Troy Day
    Reply February 8, 2019

    Troy Day

    its a mess this year Alan Smith Jim Price Link Hudson

  • Troy Day
    Reply February 8, 2019

    Troy Day

    For one ALL ministers are considered self-employed therefore you pay taxes as self-employed Jim Price Jimmy Humphrey

  • Troy Day
    Reply February 8, 2019

    Troy Day

    Link Hudson you may be happy to know that 2 child credits are now on the scale again However things are NOT looking good for ministers… http://churchinfluence.com/9-habits-for-pastors-in-2019/

  • Troy Day
    Reply February 9, 2019

    Troy Day

    The bias in the media really irks me too Link Hudson Jim Price NO one is addressing how churches and ministers will much poorer after April 15

  • Troy Day
    Reply February 9, 2019

    Troy Day

  • Troy Day
    Reply February 9, 2019

    Troy Day

    overall percentage of churches operating in the black—income EXCEEDS expenses—declined in almost every region. https://www.churchlawandtax.com/images/43067.jpg

    • Troy Day
      Reply February 9, 2019

      Troy Day

      nice map Terry Wiles

    • Terry Wiles
      Reply February 10, 2019

      Terry Wiles

      Troy Day most in New England do not promote tithing.

    • Troy Day
      Reply February 10, 2019

      Troy Day

      seems like California too from the graph

  • Troy Day
    Reply February 9, 2019

    Troy Day

    The Internal Revenue Service (IRS) released the 2019 standard mileage rates. Beginning January 1, 2019, the standard mileage rates for the use of a car (vans, pickups or panel trucks) will be: 58 cents per mile for ministry or business miles driven, up from 54.5 cents for 2018 20 cents per mile driven for medical

    Clergy pay social security as self-employed
    Determining the correct social security tax for clergy is often confusing. Clergy pay social security tax under the Self-Employment Contributions Act (SECA), not under the Federal Insurance Contributions Act (FICA). Clergy engaged in the exercise of ministry are always treated as self-employed for social security tax purposes.

    Who Is a Minister?
    When a church hires an employee, one of the initial decisions that must be made is whether to treat the worker as clergy, non-clergy employee or contractor. This decision may seem insignificant, but it has huge implications when it comes to payroll. Ministers have what is commonly referred to as “dual tax status.”

  • Troy Day
    Reply February 9, 2019

    Troy Day

    VIP Clergy Housing Lands in Seventh Circuit
    Churches and the IRS joined forces Wednesday before a sympathetic Seventh Circuit panel to argue that a 65-year-old income tax housing exemption for clergy members does not violate the Constitution’s Equal Protection Clause. “The court has to take history into account,” said attorney Luke Goodrich of the nonprofit law firm Becket

  • Troy Day
    Reply February 10, 2019

    Troy Day

    guess so much for wining Jim Price Nelson Banuchi

  • Troy Day
    Reply February 14, 2019

    Troy Day

    Rick Warner Link Hudson Jim Price cant do misc. deductibles since 2018; can list housing but not uniform except if required as Catholics who dont pay taxes anyway Thanks Trump Alan Smith

    • Link Hudson
      Reply February 14, 2019

      Link Hudson

      Troy Day have your board vote you a mandatory blue suit.

    • Troy Day
      Reply February 14, 2019

      Troy Day

      I dont have a board and a suit is specifically given as example that cannot be itemized anylonger. Also private jet, tank, submarine, space shuttle AND you cannot go on a 3-month trip to EU or Asia preach ones to your family Bible study and call it an expense 🙂

    • Link Hudson
      Reply February 14, 2019

      Link Hudson

      Troy Day they said no trip to Asia and preach once to a family member? It said no submarine?

    • Troy Day
      Reply February 14, 2019

      Troy Day

      Church are not to give reimbursements of a spouse’s travel expenses
      incurred while accompanying a minister on a business
      trip (unless the spouse’s presence serves a legitimate
      business purpose and the spouse’s expenses are reim-
      bursed under an accountable arrangement)

      Example: Pastor J goes on a trip to Asia. He is in
      Asia for 10 days and conducts one-hour worship
      services on two of those days. Pastor J will not be able
      to claim a charitable contribution deduction for the
      travel expenses that he incurs in making this trip. The
      same rule would apply if Pastor J’s spouse or children
      go along on the trip

    • Link Hudson
      Reply February 15, 2019

      Link Hudson

      Troy Day wow. Is that a quote from the IRS? Who got rid of this stuff? Is it from new legislation or administrative law from the IRS?

      Btw, your example was not about the spouse. If he could deduct the plane ticket but not her it makes sense for them to not allow deducting her airfare unless she were doing something there. But then you would be able to deduct the hotel.

      What if the pastor was doing a church seminar and sold books at the back, and wrote that up on a schedule C as a business. Could he write off 7 yeats of losses as a book salesman?

      What about evangelists? Can they deduct expenses for their trips.

      This can force preachers to be tentmakers. Go to Asia to open an MLM downline and write that off then preach on the trip.

      If this is just administrative law based on IRS interpretations it may be subject to a lawsuit. That would be ironic since Trump is friendly toward some of the types of pteachers that might want a jet.

    • Troy Day
      Reply February 15, 2019

      Troy Day

      NO I try not to quote from the IRS because since Trump won they say this on the form and change it 2 months later

    • Link Hudson
      Reply February 15, 2019

      Link Hudson

      Troy Day no what? Do you have a tax accountant?

    • Troy Day
      Reply February 15, 2019

      Troy Day

      I kind of have to have several of those just to make sure it is all in order. As you have noticed we start our taxes earlier Do you know the only open tax venue for ministers now is housing and churches push everything under housing which is also illegal Also it has to be voted by the church BEFOREHAND at the start of the year in order to be legal at all as a housing expense list

    • Link Hudson
      Reply February 15, 2019

      Link Hudson

      Troy Day could it be a strategy of liberals in the IRS to get preachers to oppose the POTUS. If so some of those preachers should talk to him about it so hecould threaten to station the trouble makers in Alaska.

    • Troy Day
      Reply February 15, 2019

      Troy Day

      I have a larger overview of the issue which you can analyze from a financial points of view BUT I will need some more time later on today to summarize fr the group here

      Housing for religious purposes has been challenged in court as we speak and may be no more if the court rules. I posted the link above I think and I have to dig it out again

      Also the 501c3 challenge that started under Bush W and exploded under Obama because of the non profit tea-party non profits is now carried over the church – religious organizations in general

      Not to mention ALL govt. help items are made super hard to apply for and be approved especially if your native language is not English – it is a mess The whole Tax reform in general as Jim Price already pointed out Social Security has been going down the drain BUT for churches and clergy it is turning to be pretty pretty bad

    • Link Hudson
      Reply February 15, 2019

      Link Hudson

      Looks like it is from legislation but maybe not aimed at pastors per se. What if the church had a teimbursement fund and if the pastor itemized, he could contribute to his own reimbursement fund by earmarking it for whatever he was going to spend, write that off donation, then take the reimbursement. Do you have to report what funds were earmarked for? The IRS might jot like the earmarking. It might look better if multiple people used the funds for ministry and gave to it. Requires keeping up with expenses and not taking the standard deduction if you want donations to reduce income. There are limis to deductable contributions.

      If a church can reimburse for that 5K ministry trip to Taiwan, you put $5K in the church fund. You get reimbursedby the chrch. Does that work for overseas trips? If you maxed out the deduction for charitable contributions it won’t help.

      https://www.churchlawandtax.com/blog/2018/march/churches-can-no-longer-itemize-deductions-business-expenses.html

    • Troy Day
      Reply February 15, 2019

      Troy Day

      the item deduction is not and there is no case no more It was settled that it canNOT be deducted no more as of 2018 BUT the housing for religious case is in court right now and very much against pastors

      Your reference for reimbursement fund is s straman in this OP of course No one has argued that for years The point for churches and clergy is that it cannot be MISC itemization which was allowed before

      Again, the list of this tax reform goes on and on if there is interest to discuss it

  • Troy Day
    Reply February 14, 2019

    Troy Day

    Rick Warner Unreimbursed employee business expenses subject to th
    2 percent AGI foor included such items as:
    • Overnight out-of-town travel
    • Local transportation
    • Meals (subject to a 50 percent AGI foor)
    • Entertainment (subject to a 50 percent AGI foor)
    • Home offce expenses
    • Business gifts
    • Dues to professional societies
    • Work-related education

    • Work clothes and uniforms if required and not suitabl
    for everyday use

    • Malpractice insurance
    • Subscriptions to professional journals and trade maga
    zines related to the taxpayer’s work
    • Equipment and supplies used in the taxpayer’s work

    • Rick Warner
      Reply February 15, 2019

      Rick Warner

      sorry have no clue to what you are talking about

    • Troy Day
      Reply February 15, 2019

      Troy Day

      Rick Warren to the comment you made about house and clothing items as deductible Do you need me to point you to your own comment ?

    • Rick Warner
      Reply February 15, 2019

      Rick Warner

      Troy Day Mr Troy…..i have terminal brain fart disease…it 930a here had breakfast at 7a and i dont remember even what i had for breakfast…you can do what is pleasing to you

    • Troy Day
      Reply February 15, 2019

      Troy Day

      We are aware of your condition and have referred you for treatment to our dear George Hartwell

    • Rick Warner
      Reply February 15, 2019

      Rick Warner

      Troy Day i have been to 5 of them…..my condition is undiagnosable…not in the text books…i am just leaving my brain to scientist, in hopes a cure can be found for those following me

    • Troy Day
      Reply February 15, 2019

      Troy Day

      referring to your comment

      Do you know that the shoes u buy for your work is a tax deductible?

      http://www.pentecostaltheology.com/enemy-strongholds/

      such are NOT deductible anylonger

    • Rick Warner
      Reply February 15, 2019

      Rick Warner

      Troy Day have taken off a pair of Tennis shoes each year for 45 years as i wear them in the medical world

  • Troy Day
    Reply February 15, 2019

    Troy Day

    Link Hudson Jim Price PART 1

    I know I made a note of that back in the day but with 50 000 comments is hard to find it so here is the brief version

    1. gas is down but milk is still up and so is everything else – makes no economic sense except that gas we remember from Bush W. aint the same gas no more just 85%

    2. medicare was repelled BUT on your taxes you STILL get penalized for not having medicare – hurts clergy first especially the ones who believe in no doctoral / medical help for religious reasons

    3. medicare is challenged on every level like car settlement They send a letter says they made a mistake but you STILL have to prove to them that they made a mistake with your papers and prove over and over again you are in the right to receive help EVEN if its obvious that a family of 4 with $25-30 should obviously be automatically approved

    4. food stamps are out of the question BUT at other help programs are also discouraged The coupons system is now replaced by an electronic card poor families slide at the cashier. IF any item they have picked is not on the approved list it is charged toward their bill – ie is NOT free and is hard to return or exchange it is a done deal and if you missed it you cant get it no more

    5. GOD forbid you are foreign and cannot fully understand the lingo on the govt. forms you are screwed. There is NO way to appeal approvals once you fill the form Changes take months and are delayed for ever

    6. 1040 form is half of page but refers to 3 times more schedules than before and each of them refer to a dozen separate work sheets – I will have to continue with the tax issue on a separate page Remember thats why the forms were late last year

    7. child credit (BOTH of them) is a mess – this hurts churches and church families which historically have more children than other 2 and a dog families Also, child credits are delayed across the line for no apparent reason – just delay and make money off it

    finally
    – the wall is not built migration is out of control
    – hate rules the country
    – gay marriage is still a law
    – LEGAL abortions are on the up and up and rising
    – nuclear war is still a thing
    – cold war is returning
    – persecution of Christians is ignored and left to be

    • Troy Day
      Reply February 15, 2019

      Troy Day

      ALSO Link Hudson NOT Same Price for Prescription Drugs Everywhere

  • Troy Day
    Reply February 15, 2019

    Troy Day

    PART 2 Link Hudson Jim Price Terry Wiles
    VIP Clergy Housing Lands in Seventh Circuit
    Churches and the IRS joined forces Wednesday before a sympathetic Seventh Circuit panel to argue that a 65-year-old income tax housing exemption for clergy members does not violate the Constitution’s Equal Protection Clause. “The court has to take history into account,” said attorney Luke Goodrich of the nonprofit law firm Becket

  • Troy Day
    Reply February 15, 2019

    Troy Day

    CHILD TAX CREDIT
    The new tax reform bill doubles the Child Tax Credit from $1,000 to $2,000, makes more of it refundable, and expands eligibility.

    How would that look for the family with 3 children in the example above? They will get $6,000 in tax credits, so they will be better off than under the previous law even though their standard deduction is $8,950 less.

    Is this true now? Link Hudson

  • Troy Day
    Reply February 15, 2019

    Troy Day

    PART 3 MISCELLANEOUS – see sched. C Link Hudson
    There are a few other notable parts of the tax bill that may or may not affect you:

    Unreimbursed Business Expenses. You will no longer be able to deduct unreimbursed business expenses on Schedule A. If you file Schedule C, you can still deduct them as business expenses.
    Alimony Treatment. The tax treatment of alimony has changed and will benefit the recipient, not the payer.
    Moving Expenses. You will no longer be able to deduct moving expenses, except for some members of the military.
    Elderly and Dependent Care Credit. A $500 nonrefundable credit will be available to those with dependents not eligible for the Child Care Tax Credit. This could include older children or parents. This also expires in 2025.

  • Link Hudson
    Reply February 15, 2019

    Link Hudson

    What if they’d just applied the changes to Reformed clergy?

    • Troy Day
      Reply February 15, 2019

      Troy Day

      well they aint applying them to catholics because they dont make enough money to pay taxes YET the make 6 figures on expenses – so maybe thats the goal

      According to IRS Publication 526, you cannot claim more than 50 percent of your adjusted gross income as charitable deductions.

      As long as you itemize your deductions, you can generally claim 100 percent of your church donations as a deduction.

      https://compasscatholic.org/tax-planning-seeing-money-paycheck/

  • Troy Day
    Reply February 16, 2019

    Troy Day

    Link Hudson I would like to hear from all who claimed this tax reform is good for the church. So far it has been only making the church poorer

    • Link Hudson
      Reply February 16, 2019

      Link Hudson

      Troy Day who claimed that?

    • Troy Day
      Reply February 16, 2019

      Troy Day

      who did not – like dozen and a half in this group alone You cant seriously expect me to believe you dont remember?

    • Link Hudson
      Reply February 16, 2019

      Link Hudson

      Troy Day I do not read all tge tax or Trump thread. You directed the last post to me. So U asked the question.

    • Troy Day
      Reply February 16, 2019

      Troy Day

      and I answered it But I am not going 1-2 yrs back and dig you all the praises You can learn to do that yourself – it is turning to be a 1-2 week pattern to no avail

    • Link Hudson
      Reply February 16, 2019

      Link Hudson

      Troy Day I am not interested. I asked because you tagged meas if to imply I had posted in favor of it.

    • Troy Day
      Reply February 16, 2019

      Troy Day

      no it does not mean that in no universe either

    • Link Hudson
      Reply February 16, 2019

      Link Hudson

      Troy Day that is a likely interpretation to many of us who do not live in the universe of your mind. This isa nuetral subject. But if one posts something like “Christians should not shoot up and beat their wives Troy Day.” other people may interpret that to imply the tagged person might be a wife-beating drug user. Ask 10 or 20 other people if that is the dase.

    • Troy Day
      Reply February 16, 2019

      Troy Day

      So what? And who cares about that? There were plenty praising the tax reform You were not one – good deal NOW what do you think about the actual OP and all the info that has been presented so far? for churches and clergy – not just reformed

    • Link Hudson
      Reply February 16, 2019

      Link Hudson

      Troy Day well, whether I like it or not I still have to pay, but it looks like it is probably going to hit a lot of pastors hard who itemized before.

    • Link Hudson
      Reply February 16, 2019

      Link Hudson

      Usually some benefit from tax reform and some suffer. I am not sue who benefits this time.

  • Troy Day
    Reply February 16, 2019

    Troy Day

    tell us ALL about them loopholes Jimmy Humphrey do our capitalist hearts some good so we can sleep better tonight

  • Rick Warner
    Reply February 16, 2019

    Rick Warner

    Troy Day do you sit on the left hand side of God, you see to be all knowing…..

  • Troy Day
    Reply February 17, 2019

    Troy Day

    your recognition comes both highly and timely

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