Worth's Income Tax Guide for Ministers 2006: For Preparing 2005 Tax Returns

by Worth, B. J.

• ISBN13: 9781928915683
• ISBN10: 192891568X
• Format: Paperback
• Copyright: 2005-12-01
• Publisher: Evangel Pub House

Summary

Ministers and other church employees are subject to special U.S. tax regulations. Virtually every year, new tax rulings affect the way that they should file their taxes. A working knowledge of these rules can help the minister save money-and that helps the church save money. Worth's Income Tax Guide for Ministers helps church workers comply with the latest tax laws with these features: Bulletins on recent court cases and legislation that affect a minister's tax filing. Step-by-step instructions for setting up the minister's compensation package to save tax dollars. Samples of completed payroll reports, W-2's, and tax returns, showing the church treasurer and minister what documents to file, how to file, and when to file them. The Worksheet for Religious Workers-a supplemental form (exclusive to Worth's Income Tax Guide) for itemizing expenses and deductions. Book jacket.

Author Biography

Beverly J. Worth is the founder and owner of Worth Tax & Financial Services of Warsaw, Indiana. She is an Enrolled Accountant with the Internal Revenue Service and a Certified Tax Practitioner. Mrs. Worth speaks annually to hundreds of pastors and accountants at her tax seminars throughout the United States. She was awarded the 2004 Business Woman of the Year Award by the National Republican Congressional Committee in March 2005. She attended an RCC dinner with special guest and speaker, President George W. Bush.

Table of Contents

Income and Finge Benefits	11	(22)
Where to Report Income	11	(6)
Dual-Status Minister	11	(1)
Lay Employees	12	(1)
Employed Ministers Are Not to Use Schedule C For Reporting Salary	12	(1)
The 20 Common Law Rules	13	(3)
Why all the Confusion over Status and Contention with the IRS?	16	(1)
Taxable Sources Of Income	17	(3)
Professional Income	18	(1)
Salary From Employer	18	(1)
Social Security Paid By the Employer	19	(1)
Non-Taxable Sources of Income---Exclusions	20	(11)
Fringe Benefits	20	(1)
Qualified Retirement Plan Contributions	20	(3)
Group Term Life Insurance	23	(1)
Accident And Health Insurance	23	(2)
Health Reimbursement Arrangements - (HRA)	25	(1)
Self-Insured Medical Reimbursement Plans	25	(1)
Cafeteria Plans	25	(1)
Qualified Moving Reimbursement	26	(1)
Qualified Tuition Reduction	26	(1)
Voluntary Tax Shelter Retirement Plans	27	(1)
Tax Sheltered Accounts - (TSA)	28	(1)
Individual Retirement Accounts - (IRA)	29	(2)
NonTaxable Gifts & Benevolence	31	(1)
Sec. 457 Deferred Compensation Plans	32	(1)
Gratuity Payments to a Retired Minister	32	(1)
Parsonage Allowance	33	(16)
Are You Entitled to the Parsonage Allowance Exclusion?	33	(6)
Are You Employed by a Church or An Integral Agency of a Church?	33	(2)
Are You Performing Ministerial Services?	35	(2)
Are You Ordained By A Church Or ``The Equivalent Thereof?''	37	(2)
Summary Comments	39	(1)
Parsonage Allowance Exclusion Rules	39	(10)
What Does the Parsonage Allowance Exclusion Include?	39	(2)
Sale of Personal Residence	41	(1)
How Much of a Minister's Salary Can Be Designated?	41	(1)
Warren v, Commissioner Tax Court Case	42	(2)
What is Meant By ``Official Designation''?	44	(1)
Retired Ministers & Parsonage Designation	45	(1)
Steps in Designating & Deducting Parsonage Allowance	46	(1)
Suggested Wording of the Official Designation	46	(2)
Computation of Parsonage Allowance - ``Worksheet For Form 2106''	48	(1)
Computation of Social Security Base - ``Worksheet For Form 2106''	48	(1)
Professional Expenses	49	(26)
Recordkeeping a Must!!	50	(1)
Unreimbursed Professional Expenses	50	(2)
Sec. 265 - Proration of Unreimbursed Expenses	52	(1)
Reimbursed Professional Expenses	52	(6)
Business Connection	53	(2)
Adequate Accounting	55	(2)
Return of Amounts Exceeding Expenses	57	(1)
Adopt One of the Following Reimbursement Plans	57	(1)
Typical Professional Expenses for a Minister	58	(7)
Auto Expense	58	(1)
Log Your Business Miles	58	(1)
Sale Or Trade Of Business Auto	59	(4)
Employer Provided Autos	63	(2)
Library & Equipment Purchases	65	(2)
Travel	67	(6)
Lodging, Meal, And Incidental Expense Per Diem Rates	68	(1)
Entertainment	69	(2)
Educational Expenses	71	(1)
Education Incentives for Taxpayer and Family	71	(1)
Office Expense and Supplies	72	(1)
Religious Materials	73	(1)
Seminars And Dues	73	(1)
Subscriptions, Paperbacks, Tapes And CDs	73	(1)
Business Telephone	73	(1)
Earned Income Credit	73	(2)
Social Security and Retirement Planning	75	(14)
Social Security for Religious Workers	75	(8)
Dual-Status Minister	75	(1)
Computation Of Social Security Base - ``Worksheet to be Used with Form 2106''	75	(1)
Social Security Exemption	76	(5)
Social Security & the Religious Sects Opposed to Insurance	81	(1)
Social Security and the Lay Employee	81	(2)
Estimated Tax, Form 1040ES	83	(1)
Retirement Planning For Religious Workers	84	(5)
Mutual Funds	85	(1)
Life Insurance	85	(1)
Annuities	85	(1)
Unqualified and Qualified Plans	86	(1)
Tax Planning for the Retired or Semi-retired Minister	87	(2)
Overseas Missionaries and Religious Workers	89	(6)
Missionaries Serving Overseas	89	(4)
Bona Fide Residency and Physical Presence Rules	90	(1)
Discussion of Form 2555 and Form 2555-EZ	90	(1)
Vacation Computation	91	(1)
Moving Expense --- Overseas	91	(1)
When and Where To File As An Overseas Missionary	92	(1)
Independent Missionaries	92	(1)
Religious Orders --- Two Types	93	(2)
Protestant Religious Orders Described in Sec. 1402(c)(4)	93	(1)
Information Returns and Proper Tax Treatment for Sec. 1402(c)(4) Religious Orders	94	(1)
Religious Orders Described in Sec. 1402(g)	94	(1)
Information Returns and Proper Tax Treatment for Sec. 1402(g) Religious Orders	94	(1)
Completed Payroll Reports	95	(18)
Steps in Establishing a Compensation Package	95	(1)
Dual-Status Minister - Rev. Snodgrass' Compensation Package	96	(1)
Lay Employee - Joseph Mop's Compensation Package	96	(1)
Organizations Must File Information Returns!	96	(17)
Who is An Employer?	96	(1)
Who Is An Employee?	97	(1)
Who Is An Independent Contractor?	97	(1)
Informational Return Penalties	97	(1)
How To Prepare Information Returns	98	(7)
Chart of Where to Show Transactions	105	(3)
Example, Nonelecting Church	108	(2)
Example, Electing Church (Filed Form 8274)	110	(3)
Completed Income Tax Return	113	(12)
Without Accountable Reimbursement Plan	114	(8)
With Accountable Reimbursement Plan	122	(3)
Checklist	125	(12)
Index	137	(4)
Services	141	(3)
Information for Ordering Books And Supplies	141	(1)
Consultations, Payroll Service, and Seminar Information	142	(1)
Tax Seminars Locations and Dates	143	(1)
Tax Preparation by Mail Information	144