Why do pastors pay taxes?
According to the IRS, a licensed, commissioned, or ordained minister is generally treated as a common law employee of his or her church, denomination, or sect. This means that, as a common law employee of your church, you are entitled to Social Security Exemption. There may be exceptions however, and this is why it is important to contact a qualified tax professional who specializes in clergy-related tax returns.
What if I’m a traveling minister?
The IRS may have exceptions for you. Contact us for more information about clergy taxes.
What kinds of taxes am I expected to pay?
Income Tax For Ministers may be the same as for when you are self-employed; however that is not always the case. For example, Medicare and retirement taxes are considered to be taxed at the same rate as those of the common law employee. There may be other exceptions to ministerial taxes.
What is an enroll agent?
An Enrolled Agent (EA) is a federally-authorized tax practitioner who has technical expertise in the field of taxation and who is empowered by the U.S. Department of the Treasury to represent taxpayers before all administrative levels of the Internal Revenue Service for audits, collections, and appeals. The license is earned in one of two ways, by passing a comprehensive examination which covers all aspects of the tax code, or having worked at the IRS for five years in a position which regularly interpreted and applied the tax code and its regulations.
I use my personal vehicle for ministry business. Does this make my vehicle or any repairs a business expense?
While you may use your personal vehicle for ministry business if it is owned by you, no repairs or payments can be considered a business expense. However, any mileage that you accrue throughout the year can be deducted from your income and should be reimbursed by the ministry.
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