Publication 517 - Social Security And Other Information For Members Of The Clergy And Religious Workers - 2011 Page 12
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30245 miles × 51 cents ($0.51)
=
$125
you do not owe tax, you can get a refund of the
Rev. White owns a home next to the church.
1
245 miles × 55.5 cents ($0.555)
2
=
136
credit.
He makes a $650 per month mortgage payment
Total =
$261
You cannot take the credit for 2011 if your
of principal and interest only. He paid $1,800 in
earned income (or adjusted gross income) is:
real estate taxes for the year on the home. The
1 This is the standard mileage rate for January 1 to
church paid him $800 per month as his parson-
•
June 30 of 2011.
$13,660 or more ($18,740 or more if mar-
age allowance (excluding utilities). The home’s
2 This is the standard mileage rate for July 1 to
ried filing jointly) and you do not have a
fair rental value for the year (excluding utilities)
December 31 of 2011.
qualifying child,
is $9,840. The utility bills for the year totaled
These expenses total $348 ($261 + $87). How-
•
$36,052 or more ($41,132 or more if mar-
$960. The church paid him $100 per month
ever, he cannot deduct the part of his expenses
ried filing jointly) and you have one qualify-
designated as an allowance for utility costs.
allocable to his tax-free parsonage allowance.
ing child,
The parts of Rev. and Mrs. White’s income
First, Rev. White uses Worksheet 1 (see
tax return are explained in the order they are
•
$40,964 or more ($46,044 or more if mar-
Attachment 1
later) to figure what percentage of
completed. They are illustrated in the order that
ried filing jointly) and you have two qualify-
his business expenses are not deductible. Then
Rev. White will assemble the return to send it to
ing children, or
he completes Worksheet 2 (see
Attachment 1
the IRS.
later) to show that 23% (or $80 = $348 × 23%
•
$43,998 or more ($49,078 if married filing
(.23)) of his business expenses are not deducti-
Form W-2 From Church
jointly) and you have three or more quali-
ble because they are allocable to his tax-free
fying children.
allowance. He subtracts the $80 from the $348,
The church completed its
Form W-2
for Rev.
enters the $268 difference on line 2, and adds a
White as follows.
Earned income. Earned income includes
note at the bottom of the page to see the at-
your:
tached statement.
Box 1.
The church entered Rev. White’s
Rev. White attaches Worksheets 1 and 2 to
1. Wages, salaries, tips, and other taxable
$31,000 salary.
his return. This is part of his required statement.
employee compensation (even if these
See
Attachment 1
later.
amounts are exempt from FICA or SECA),
Box 2.
The church left this box blank because
and
Rev. White did not request federal income tax
Line 3.
He enters his net profit of $3,732
($4,000 − $268) on line 3 and on Form 1040, line
withholding.
2. Net earnings from self-employment that
12.
are not exempt from SECA (you do not
Boxes 3 through 6. Rev. White is considered
have an approved Form 4029 or 4361)
Lines 4 through 8b.
Rev. White fills out these
a self-employed person for purposes of social
with the following adjustments.
lines to report information about his car.
security and Medicare tax withholding, so the
a. Subtract the amount you claimed (or
church left these boxes blank.
Form 2106-EZ
should have claimed) on Form 1040,
line 27, for the deductible part of your
Box 14.
The church entered Rev. White’s
Rev. White fills out
Form 2106-EZ
to report the
SE tax.
total parsonage and utilities allowance for the
unreimbursed business expenses he had as a
year and identified them.
b. Add any amount from Schedule SE, line
common-law employee of First United Church.
4b and line 5a.
Form W-2 From College
Line 1.
Before completing line 1, Rev. White
To figure your earned income credit, see the
fills out Part II because he used his car for
The community college gave Rev. White a
Form
Form 1040 instructions for lines 64a and 64b.
church business. His records show that he
W-2
that showed the following.
drove 2,774 business miles (1,387 miles from
If you are a minister and have an ap-
January 1 through June 30, and 1,387 miles
!
proved Form 4361, your earned in-
Box 1.
The college entered Rev. White’s
from July 1 through December 31), which he
come will still include wages and
CAUTION
$3,400 salary.
reports in Part II. Then, he figures his car ex-
salaries earned as an employee, but it will not
pense for his line 1 entry.
include amounts you received for nonemployee
Box 2.
The college withheld $272 in federal
ministerial duties, such as fees for performing
1,387 miles × 51 cents ($0.51)
1
= $ 707
income tax on Rev. White’s behalf.
marriages and baptisms, and honoraria for de-
1,387 miles × 55.5 cents ($0.555)
2
=
770
livering speeches.
Total = $1,477
Boxes 3 and 5.
As an employee of the col-
lege, Rev. White is subject to social security and
1 This is the standard mileage rate for January 1 to
More information. For detailed rules on this
Medicare withholding on his full salary from the
June 30 of 2011.
credit, see Publication 596. To figure the amount
2 This is the standard mileage rate for July 1 to
college.
of your credit, you can either fill out a worksheet
December 31 of 2011.
or have the IRS compute the credit for you. You
Box 4.
The college withheld $142.80 in social
may need to complete Schedule EIC and attach
Line 4.
He enters $231 for his professional
security taxes.
it to your tax return.
publications and booklets.
Box 6.
The college withheld $49.30 in Medi-
Line 6.
Before entering the total expenses on
care taxes.
line 6, Rev. White must reduce them by the
Comprehensive
amount allocable to his tax-free parsonage al-
Schedule C-EZ (Form 1040)
lowance. After completing Worksheet 3 (see
At-
Example
tachment
1, later), he finds that 23% [or $393 =
Some of Rev. White’s entries on
Schedule C-EZ
($1,477 + $231) × 23% (.23)] of his employee
are explained here.
Rev. John White is the minister of the First
business expenses are not deductible. He sub-
United Church. He is married and has one child.
tracts $393 from $1,708 ($1,477 + $231) and
Line 1b.
Rev. White reports the $4,000 from
The child is considered a qualifying child for the
enters the result, $1,315, on line 6, adding a
weddings, baptisms, and honoraria.
child tax credit. Mrs. White is not employed
note at the bottom of the page about the at-
outside the home. Rev. White is a common-law
tached statement. He also enters $1,315 on
employee of the church, and he has not applied
Line 2.
Rev. White reports his expenses re-
Schedule A (Form 1040), line 21.
for an exemption from SE tax.
lated to the line 1b amount. He paid $87 for
Schedule A (Form 1040)
The church paid Rev. White a salary of
marriage and family booklets and drove his car
$31,000. In addition, as a self-employed person,
490 miles for business (245 miles from January
he earned $4,000 during the year for weddings,
1 through June 30, and 245 miles from July 1
Rev. White fills out
Schedule A
as explained
baptisms, and honoraria. He made estimated
through December 31), mainly in connection
here.
tax payments during the year totaling $7,000.
with honoraria. Rev. White used the standard
He taught a course at the local community col-
mileage rate to figure his car expense, as fol-
Line 6.
He deducts $1,800 in real estate taxes
lege, for which he was paid $3,400.
lows.
paid in 2011.
Publication 517 (2011)
Page 12
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