Let’s assume you’ve decided to have your tax return prepared by a professional. The next step is to find someone who is experienced and competent in the preparation of ministers’ tax returns. Here are some tips to help you find such a person:
- If possible, stick with a CPA or tax attorney. These professionals have completed a rigorous educational program, passed a difficult qualifying examination, and are subject to a comprehensive body of professional ethics.
- Try to use someone local.
- Find other ministers in your community who have their tax returns prepared by a professional, and ask questions. Who do they use? Are they pleased? What is the cost? How many ministers’ tax returns does the person prepare?
- Call CPAs listed in your telephone directory; ask if they prepare ministers’ tax returns and, if so, ask how many they prepare.
When you find one or more possible candidates, consider asking a few simple questions that should be answered easily by anyone with any experience in handling ministers’ tax returns. Here are four examples:
- Are ministers employees or self-employed for Social Security purposes? Ministers always are self-employed for Social Security purposes with respect to their ministerial income.
- Can I claim my housing allowance exclusion in computing my 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 rather than FICA taxes on their ministerial income.
- If I report my church wages as an employee, are my wages subject to income tax withholding? No, unless a minister elects voluntary withholding.
- What is the minister’s housing allowance?The portion of a minister’s salary designated in advance by an employing church for housing expenses. This amount is not taxable in computing a minister’s income taxes to the extent it is used to pay housing expenses and does not exceed the home’s fair rental value.
- Persons who are familiar with ministers’ taxes should be able to answer these questions.
- Adapted from chapter 1 of the Church & Clergy Tax Guide. Order it now for tax help throughout the year.