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Clergy Taxes

Filing as an employee or self-employed

Internal Revenue Manual update MT 5(10)00-2

The IRS has been concerned for a number of years with the problem of persons reporting their income taxes as self-employed when in fact they are more properly characterized as employees.

The IRS and General Accounting Office are conducting a joint study to determine whether 1099 forms (annual information returns issued to self-employed workers) may reveal workers more properly classified as employees. In particular, the IRS noted recently that the study of 1099 forms has revealed a "universe" of self-employed persons who received all of their business income (reported on Schedule C of Form 1040) from a single employer.

The IRS is in the process of determining whether such a relationship is an indication of a misclassification of employees as self-employed. This is a significant issue for clergy, many of whom continue to report their federal ...

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Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.

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  • March 1, 1989

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