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Monday, April 12, 2010

2nd Monday Discussion: 1040-not-so-EZ

We're three days from tax day, and it's on everyone's minds, but there are particular complications for clergy when it comes to taxes.
Even the payroll companies that claim they know how to handle our needs don't know how. 
Even accountants with great experience find some things about our situations cloudy. 
So for today's discussion, we'll open the comments to stories good and bad about the peculiarities of clergy taxes. Because that 1040EZ? Is wishful thinking.


  1. I am not paid to say this :) but I just want to put a plug in for It handles clergy compensation quite well--has the right questions for getting the self-employment tax right, and is very easy to use. Less expensive than an accountant, too!

    I handle the self-employment tax by having extra withholding from my paycheck. That way I don't have to pay quarterly. That just seems to work better for me.

    Happy to report that my taxes were done over a month ago! One area of my life where I'm not last minute (one of the few!)

    Good luck to everyone still preparing to file.

  2. This is probably the first place I've worked where they could have handled withholding, so I hadn't thought of that. I'll remember it for my next "gig!"
    I've got a problem from a past church where a new Treasurer didn't understand that the Social Security offset/FICA didn't count as income to me and filed a 1099. I thought we had taken care of this two years ago, but now the IRS wants more money for that year. Since I don't work there anymore, this is awkward. Bleh. There was also an issue with the housing allowance at that church, something we're still trying to straighten out so I don't end up owing more $$$ from 2007.
    I find the whole thing overwhelming, to put it mildly.

  3. we've been using Turbo Tx for 20 years, but next year will be the first year I will be filing as clergy. I'm glad to know it does it correctly. I was worried. I also have the self employment tax withheld. The treasurer was a little unsure (the previous ministers didn't do it that way!) but now that we have her doing payroll in powerchurch and she doesn't have to compute it by hand, she's OK with it.

  4. I've used the same accountant for 23 years; he specializes in clergy taxes, and because I am highly risk averse, I like the confidence that comes with having him do our taxes. We've had all sorts of odd big and little things over the years that he has known how to handle to our advantage as well, so in the end I think he has probably paid for himself. Dh was unemployed almost all of 2009, so one of the bright sides to that was that we owed nothing to the federal government (well, after my SE tax)...

    Our payroll company is what drives me nuts. It takes them multiple tries to get anything right, and because I am not the administrator, they won't talk directly to me to sort things out, only to the office manager. Bureaucracy at its finest!

    Prayers for smooth and easy filing for those still crunching numbers and filling out forms.

  5. One half of a clergy couple here, two different churches. Complicated, it is. We actually had several very poor (ha! pun not intended, but appropriate!) experiences with a so-called clergy specialist tax preparer, and have had extremely good experiences with a large chain you would recognize (like RDM says, they ask the right questions re: housing allowance, self-employment, etc).

    My fun story for this year is that we sat down to get all of our paperwork together a couple of weeks ago (yes, we procrastinate) and--look--no W-2 for me! I worked Jan-May of 2009, surely I need one! The secretary/financial person "didn't think about you needing one." Argh. It came, just a few days later, but then it was Holy Week and...the stuff is at the office right now, hopefully to be finished by Thursday.

  6. My siblings and I are in a family corporation which adds to the complicated-ness of my taxes. My professional is worth every penny I pay him.

    I thought I HAD to pay quarterly's but he checked with the IRS and they said, I could not be penalized for not doing that...just to be prepared next April 15th. So, I am doing my own withholding and earning some interest at the same time.

  7. The church I served the first part of the year withheld for me... and withheld extra for the SE. So nice! But the church I've served since July doesn't do that, so I'm back to paying quarterly. With two churches in two different states and my husband working in a third state, tax prep was fun this year. I'm glad we got it done early (with the help of a professional). Apparently I overpaid on the quarterly taxes, so I've already deposited one refund check in the bank!

  8. British tax is different but no simpler! I have used a specialist ministry tax firm for a number of years & can relate to the 'peace of mind' element of knowing someone else is dealing with it! I tried to do it myself one year and made a complete hash of it. We've just had our forms this side of the pond - so we now spend the next 8 months or so feeling guilty about not getting round to filling them in! Huge sympathy to all who are thus afflicted!

  9. This year I get to file twice! I am buying a condo for my retirement in June, and won't close until perhaps April 22. I want to file for the first-time homebuyer tax credit, soooo, I will file for Thursday using the standard deduction, and then after closing file an amended return itemizing and filing for the tax credit.

    I also have used turbotax for many years with no problems. This year I was even audited for 2007. I had to send them documentation for my health and business deductions, which they accepted.
    I have a good friend who works for H % R Block who kind of specializes in clergy taxes, and she is very willing to give me advice.

    I've been having tax withheld for a number of years now. Some of my treasurers (small churches) have been fine with doing it since I figure out how much to deduct, since the tables are useless. They have to file social security for the organist, etc., so they're doing the basic paperwork anyway.

  10. I also use TurboTax. It knows clergy issues backwards and forwards.

  11. Husband does taxes (he is clergy too), and always delays till last minute. Arrggghhh! Gonna tell him turbotax does it right.

  12. Well today was the day I planned to do my taxes myself--have been paying an out of town lawyer but I thought it might be simple enough this year to do it but decided to try Turbo tax on recommendations here. Went very well except that I came home tonight to find that the IRS had rejected my return. Good thing I did not wait till Thursday! So tomorrow I will be back with Turbo trying to figure out what went wrong --probably entered my church's ID # wrong...

  13. I used Tax Cut because (for some reason) TurboTax crashes on my machine. Unfortunately, Tax Cut does not process the "housing allowance" - it produces a fatal error in filing, so I had to MAIL my taxes in. However, I learned from a friend to always mail with a return receipt so that you have proof you sent your taxes in.

    I HATE taxes. Almost as much as... as... as...

  14. I pay to have my taxes done by one of those clergy friendly types.

    But I have a friend who uses TurboTax (her husband is a CPA) and we happened to be talking about tax stuff. Her assessment is:

    TurboTax doesn't seem to handle UM clergy taxes exactly right. There's something funky with housing stuff & it doesn't let you put honoraria in easily.

    as they say: your mileage may vary

  15. AND... they are ready to mail. I mailed them last week without postage. And they came back to me today. :blush: I need (a) more sleep and (b) an "E-Z" button.


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