If you’ve decided to have your tax return prepared by a professional, the next step is finding someone experienced and competent in preparing ministers’ tax returns. Use the following tips to ensure you select the right tax preparer for your needs.
Key Qualifications to Look For
- Choose a CPA or Tax Attorney: These professionals undergo rigorous training, pass qualifying exams, and adhere to strict professional ethics.
- Work with Someone Local: It’s helpful to have a preparer nearby for easy communication and in-person meetings.
- Ask for Recommendations: Speak with other ministers in your community. Ask who they use, their level of satisfaction, costs, and how many ministers’ tax returns the preparer handles annually.
- Call Local CPAs: Contact CPAs listed in your area and inquire about their experience with ministers’ tax returns.
- Consider an Enrolled Agent: These professionals are licensed by the IRS and can also be a viable option.
Questions to Evaluate Potential Preparers
When you find one or more potential candidates, ask them the following questions to gauge their experience with ministers’ tax returns:
- Are ministers employees or self-employed for Social Security purposes? Ministers are always self-employed for Social Security purposes regarding their ministerial income.
- Can I claim my housing allowance exclusion when computing self-employment taxes? No.
- If I report my church wages as an employee, are my wages subject to FICA taxes? No. Ministers pay the self-employment tax instead of FICA taxes on ministerial income.
- If I report my church wages as an employee, are my wages subject to income tax withholding? No, unless you opt for voluntary withholding.
Understanding the Minister’s Housing Allowance
The minister’s housing allowance is a portion of a minister’s salary designated in advance by an employing church for housing expenses. Here are the key details:
- The allowance is not taxable for income tax purposes as long as it’s used to pay housing expenses and does not exceed the home’s fair rental value.
- The housing allowance is still subject to self-employment taxes.
FAQs About Selecting a Tax Preparer
What qualifications should I look for in a tax preparer? Seek a CPA, tax attorney, or experienced enrolled agent familiar with ministers’ tax returns. How do I know if a preparer is experienced with ministers’ taxes? Ask specific questions about housing allowances, Social Security status, and tax withholding for ministers. What are the risks of choosing an inexperienced preparer? An inexperienced preparer may overlook key deductions or misreport income, potentially leading to errors or penalties. Can I prepare my taxes myself as a minister? Yes, but it’s advisable to seek professional assistance if you’re unfamiliar with the complexities of ministerial taxes.
Conclusion
Finding the right tax preparer is crucial for ministers to ensure compliance and maximize deductions. By following these tips and asking the right questions, you can confidently select a qualified professional to handle your tax return.
