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    Preparing Tax Returns for Ministers: An Easy Reference Guide
    Preparing Tax Returns for Ministers: An Easy Reference Guide
    Preparing Tax Returns for Ministers: An Easy Reference Guide
    Ebook37 pages50 minutes

    Preparing Tax Returns for Ministers: An Easy Reference Guide

    By Kay Mortimer

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    About this ebook

    This compact guide provides tax professionals and ministers a handy reference for preparing tax returns for ministers.

    Learn the basics of a minister's unique tax status and how to properly file their income tax returns.

    For over 30 years, Kay K. Mortimer, EA, served the needs of various ministers and churches through her thriving tax practice. Being an Ordained Minister herself, she offers unique insight into the tax needs of  this specialized field. Written in easy-to-understand language, Kay covers most topics of concern to ministers in their one-of-a-kind situation.

    LanguageEnglish
    PublisherKay Mortimer
    Release dateDec 31, 2017
    ISBN9781386816805
    Preparing Tax Returns for Ministers: An Easy Reference Guide
    Author

    Kay Mortimer

    Rev. Kay Mortimer is an Ordained Minister whose greatest passion is in the study and teaching of God’s Word. She serves her local church as a Bible study teacher, intercessor and altar minister. She also assists in various church programs and outreaches. Kay also writes church drama scripts, many of which she has been blessed to direct and bring to production for the glory of God. These are currently under development and will be made available for churches to perform. Kay writes articles and other books, as well as Bible study materials and devotions. She also has a current radio ministry, audio podcasts, and Youtube videos. Visit www.kaymortimer.com for more details and links to her other ministry offerings. Kay is an active Enrolled Agent with a Bachelor’s Degree in Accounting and had her own tax practice for twenty-four years of her thirty-year career in accounting and tax. She specialized in church and nonprofit accounting and taxes, as well as payroll, bookkeeping, and income tax preparation for small businesses and individuals. She also writes and teaches on a variety of tax and accounting matters. Whether in her professional work or in her Christian ministry work, Kay hopes to be used of the Lord to reach people for His glory and for their edification and growth as disciples of Jesus Christ.

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      Book preview

      Preparing Tax Returns for Ministers - Kay Mortimer

      CHAPTER ONE

      The Unique Challenge of Ministers’ Taxes

      Ministers sit in a unique seat when it comes to their tax reporting requirements.  As a dual-status taxpayer, ministers require proper tax handling of items pertaining particularly to them. 

      Tax professionals should be aware that, in many cases, churches use volunteers to function as treasurers.  Such volunteers, in many cases, are unfamiliar with tax law and the implications of tax treatment for items pertaining to their ministerial staff.

      Tax professionals who learn the correct handling of ministers’ taxes set themselves apart from average tax preparers unskilled in this arena.  So, who is a minister?

      Definition of Minister

      Pastors, rabbis, priests, and other religious leaders of churches wear the collective title of minister in the eyes of the IRS.  The official definition says ministers are individuals who are duly ordained, commissioned, or licensed by a religious body constituting a church or church denomination.¹

      The IRS further explains that they can conduct religious worship, perform sacerdotal functions, and administer the specific ordinances or sacraments of their church or denomination.²

      For simplification purposes, the term minister shall be used collectively to refer to any individual meeting the definition of a minister for purposes of tax law.

      Ministers fall into an unusual category known as dual-status taxpayers.  This means that, for SECA (self-employed social security and Medicare) purposes, they are considered self-employed, while for federal tax purposes they generally are considered common-law employees.  How their earnings are treated, and which earnings are taxable for which type of tax, is the challenge for the tax professional.

      ___________________________________________

      ¹Publication 517: Social Security and Other Information for Members of the Clergy and Religious Workers, Department of the Treasury, Internal Revenue Service, p.3.

      ²Ibid, p. 3.

      The following excerpt helps to clarify the definition of a minister:

      How the Courts Have Ruled

      Court action in 1989 established 5 factors when determining whether one is a minister for tax purposes.

      1. Does the individual administer the sacraments?

      2. Does the individual conduct worship

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